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NFL recommends exception to debt limit so Benson can buy out estranged heirs

The NFL plans to advise owners that New Orleans Saints owner Tom Benson should be allowed to exceed the league’s $250 million team debt limit by more than 50 percent to facilitate the buyout of his estranged heirs, court documents disclosed.

The NFL approval is necessary for Benson to transfer team shares out of his heirs’ trusts. The league had not acted on his request for more than a year, but in early September he changed the terms of the debt so that if he defaulted, his heirs would not have recourse to assume control of the team. That apparently brought the debt in line with a 1995 NFL resolution that makes an exception for teams to exceed debt caps in situations like these.

“NFL representatives have indicated that they would advise the NFL Finance committee that the notes delivered with Mr. Benson’s Supplemental Notice of Exchange on Sept. 8 fall within the 1995 resolution and would recommend that the NFL Finance committee approve the transaction,” Saints President Dennis Lauscha wrote in a declaration filed in New Orleans federal court earlier this month. Finance committee approval is needed, but not a vote of the 32 teams, the documents said.

Jay Bauman, NFL senior vice president who oversees team finance issues, is scheduled to be deposed this week or next, according to a letter from a trustee’s attorney filed in the court case. Benson is suing two trustees for blocking his early 2015 move to replace team shares in his heirs’ trusts with promissory notes. The case is scheduled to go to trial Feb. 6, the day after the Super Bowl.

The value of the promissory notes to swap out the Saints shares is more than $375 million, “far in excess of the NFL’s $250 million debt limit,” according to a motion filed by trustee Mary Rowe. Benson also owns the New Orleans Pelicans, but he has not exceeded that league’s debt limit on his exchanges for shares of the NBA team. (In fact, his attorneys wrote in a motion that he used cash to swap out the NBA team shares.)

In January 2015, Benson moved to distance himself from his daughter and two grandchildren after they feuded with his third wife, Gayle Benson. Until the early 2015 changes, one of his grandchildren, Rita Benson LeBlanc, was due to take over the team when he died.

The heirs have tried a variety of maneuvers to stop the trust exchange, including unsuccessfully seeking to get their benefactor declared incompetent. Under terms of the trusts, while Benson is allowed to take out the team shares, he must replace them with assets of equal value. In the case of the Saints shares he is using promissory notes, which means he is borrowing from the trusts. Because the notes are tied to the swap of the team shares, it counts as debt against the team under NFL rules.

The trustees have made a large issue out of the fact the NFL has yet to approve the debt, and Rowe, who oversees the football shares, wrote in a motion last month that the NFL had rejected the transaction.

Lauscha in his declaration called that untrue.

“The fact that a particular transaction is outside of the debt limit or does not comply with the 1995 resolution, does not mean that the transaction has been rejected,” Lauscha wrote. “Although the NFL Finance committee acting on its own cannot approve a transaction that does not comply with the debt limit of the 1995 resolution, an individual NFL owner, like Mr. Benson, can ask his fellow owners to approve a transaction in a case by case basis.”

Instead, Benson chose to reform the notes to bring them into compliance with the 1995 resolution.

The NFL’s Bauman is expected to testify accordingly during his deposition, Lauscha wrote.

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