Dallas Mavericks sued by minority owner Perot

Well, this is almost sure to be ugly.

Yesterday it was revealed that minority Dallas Mavericks owner, Ross Perot Jr., was suing the Mavericks (and Mavericks owner Mark Cuban) alleging the club was insolvent.  The details,

In the 13-page petition filed in a state district court in Dallas, Hillwood Investment Properties III Ltd. asked that a judge place Dallas Basketball Ltd., the team’s business management, in receivership and order an independent audit of its operations. Hillwood also is seeking actual and punitive damages.

The petition alleges team management lost $50 million last fiscal year. Hillwood also alleges that the club has lost $273 million since Cuban’s Radical Mavericks Management LLC bought its majority stake in 2000 from Perot’s company, which retains a minority stake and partnership in Dallas Basketball Ltd.

The lawsuit also alleges the Mavericks company has an interest-bearing debt of more than $200 million, a $289 million deficit and negative working capital of $75 million. (via NBCDFW)

The suit goes on to allege that the Mavericks have relied heavily on borrowing money to meet financial obligations such that it has diminished the value of the Perot/Hillwood Investment Properties investment and put the long-term viability of the Mavericks in doubt. and that they’re unable to repay those long term debts.

For the sake of information, Forbes lists the Mavericks as the 7th most valuable team in the NBA, but does note that Cuban has spent nearly $400 million on payroll and $70 million in luxury tax over the last four years alone.  Furthermore, the Mavs have operated at a loss for 11 out of the last 12 years that Forbes has been tracking team finances. Makes me wonder if the Mavs received any money when the NBA received their “bailout money” a year ago.

As for Mavs owner Mark Cuban? The man who is always a magnet for quotes stated that not only is the team not in jeopardy, but that much of the money owed by the club is owed back to Cuban himself,

In a statement issued Monday night, Cuban said he had “either personally guaranteed or provided funding” to finance team operations. “So (Perot) is saying I can’t pay back the money to me.

“The real issue is that he wants me to run the team the way he did in the ’90s,” Cuban stated, referring to one of the team’s leanest periods on the court.

“The biggest mistake I have made with the Mavs was keeping him as a partner,” Cuban said of Perot. “The Mavs are just fine — except for the time and money we will have to waste dealing with Perot.”

This lawsuit, the Dirk Nowitzki free agency situation…should be an interesting summer in Dallas, no?

Tags: Basketball, Dallas Mavericks, insolvency, Lawsuit, Mark Cuban, NBA, Ross Perot Jr.

Category: Basketball