SBD/January 24, 2011/Franchises

Atlanta Spirit Sues Law Firm For $200M Over Botched Thrashers Sale

Atlanta Spirit first wanted to sell the Thrashers after the '04-05 NHL lockout
The Atlanta Spirit ownership group on Friday filed a $200M malpractice lawsuit against King & Spalding LLP, alleging that "a 'flawed' contract written by an esteemed Atlanta law firm has prevented the sale" of the Thrashers for six years, according to Kristi Swartz of the ATLANTA CONSTITUTION. The suit, filed in Fulton County (Ga.) Superior Court, claims that the Thrashers have posted more than $130M in "operating costs since 2005 -- the year Boston-based partner Steve Belkin agreed to sell his 30 percent stake -- and the franchise value has dropped" by more than $50M. Atlanta Spirit contends the contract written by King & Spalding, drafted in August '05 for the buyout of Belkin, made the ownership group "unable to sell or otherwise dispose of" the Thrashers, which it first aimed to do after the '04-05 NHL lockout. The lawsuit claims that King & Spalding's contract "caused the buyout process to 'quickly break down into chaos,' costing seven of the partners $14.5 million in legal fees and forcing them to shovel more than $130 million into the Thrashers to keep the franchise afloat." The lawsuit, which does not name the Hawks or Philips Arena, "asks for a jury trial." Atlanta Spirit "wants compensatory and consequential damages, as well as punitive damages, pre-judgment interest and attorneys fees" (ATLANTA CONSTITUTION, 1/22). Atlanta Spirit co-Owner Michael Gearon Jr. in a statement said the suit "will have no effect" on the Thrashers and Hawks (THE DAILY). Alston & Bird LLP attorney Steve Collins, who is representing King & Spalding, said, "King & Spalding and its lawyers acted appropriately and the suit is without merit" (BIZJOURNALS.com, 1/21).

TRUTH & LIES: In Atlanta, Bill Tiller noted Atlanta Spirit "denied" several times that it was looking to sell the Thrashers, "only to reveal in court documents recently that they had indeed looked to do just that." Atlanta fans should not be "terribly shocked to learn that one of … if not THE … most dysfunctional collection of businessmen ever to own a sports franchise actually dared to speak untruths to their paying population." Tiller: "Given that those who make up this mess of an ownership have done enough damage to this franchise since acquiring it, the best thing for the franchise and its fans is for them to find a new buyer and stop doing more damage" (AJC.com, 1/22). Also in Atlanta, Jeff Schultz wrote, "They told you they cared. They lied. ... They told you not to pay attention to any of those rumors of the Thrashers being for sale, although they eventually admitted begrudgingly that, yes, they were looking for 'investors.' They lied." Now the owners "can't figure out how they’ve burned so many bridges in this town why fans still feel too angry or worn down to show up for a pretty decent team." Schultz: "If Atlanta loses its second NHL franchise, it won’t be because the sport failed here. It will be because ownership and management failed" (AJC.com, 1/21).
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Franchises, Atlanta Thrashers, Hockey

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