Inside ISE’s very public split with Dan Fegan
Independent Sports & Entertainment’s move to get a court order restraining NBA agent Dan Fegan from competing against the firm has made public messy details of agency infighting that are normally private.
Fegan, according court papers filed by ISE, was trying to orchestrate “a mass exodus” of agents when his contract was up at the end of this year. ISE filed court papers March 10 after announcing that it had fired Fegan, its president of basketball, in a press release.
Fegan, meanwhile, through his attorney Howard Weitzman — a well-known Los Angeles lawyer who briefly represented O.J. Simpson in Simpson’s infamous 1994 criminal case — called ISE’s lawsuit “outrageous and filled with erroneous allegations.”
ISE hired Los Angeles law firm Gibson Dunn & Crutcher to persuade a judge to grant a temporary restraining order and a permanent injunction against Fegan. Like the contracts of most major agents and high-level sports executives, disputes arising from Fegan’s employment contract are subject to arbitration, but ISE said in court papers that it needs to go to court to seek emergency relief from Fegan’s actions.
ISE sought a temporary restraining order that would allow Fegan to represent existing clients but prevent him from recruiting new ones or joining a competing agency. A decision on the temporary restraining order had not been made by last Thursday, but if the judge does not issue the emergency relief, ISE intends to seek a permanent injunction, lawyers said.
“They are seeking an injunction pushing him out of the business entirely,” said Jeremiah Reynolds, an attorney at Kinsella Weitzman Iser Kump & Aldisert, who represented Fegan at a hearing last week.
In its filing for the injunction, ISE alleged Fegan, instead of working to sign the agents who worked under him to long term contracts, instead worked to do the opposite. “Fegan bullied, harassed, and pressured the agents to take ‘loyalty pledges’ to him, to disavow any loyalty to ISE, and unreasonably pressured them not to sign long-term contracts with ISE Basketball but to instead stay as at-will employees so they could leave with Fegan when his employment term expired,” the complaint alleges.
It is not clear which agents told ISE about this alleged behavior, but at a hearing in Los Angeles Superior Court last week, it was revealed that agent James Dunleavy filed a declaration with the court saying that Fegan called Dunleavy after Fegan was fired, asking Dunleavy to join him.
“He can’t call people up, saying, ‘I am now Dan Fegan Inc.,’” ISE attorney and Gibson Dunn partner James Fogelman said at the hearing, noting that ISE paid Fegan $20 million to buy his business and his loyalty.
Fogelman noted that despite that, Fegan, in his declaration to the court, said he intended to work on recruiting clients at the NCAA tournament starting last week.
In the complaint, ISE alleges that Fegan had a side business, “Fegan Sports, LLC,” and that he signed a “high profile NBA player” to a contract with this entity during the tenure at the company. Fegan’s attorneys said the allegation that Fegan ran a side business was “a total fabrication.”
Among the issues that make the case complex is that Fegan worked for ISE under two names.
He began working for the entity in 2013 when it was Relativity Sports. That agency was launched by movie studio Relativity Media, which later filed for Chapter 11 bankruptcy protection. Relativity Sports, a separate entity, did not file for bankruptcy protection, and was relaunched as ISE after Pittsburgh Penguins co-owner Ron Burkle upped his stake in the sports agency to become the majority owner and rebranded it.
Reynolds, Fegan’s attorney, said that Fegan helped Relativity Sports with his own money during the Chapter 11 period for Relativity Media. “Mr. Fegan spent approximately $1 million to keep this business afloat,” he said at the hearing.
Reynolds also noted that Fegan was offered a long-term contract by ISE the day before it publicly fired him. “Why are you offering this guy a long-term contract if he is doing all of these things?” Reynolds asked the judge rhetorically.
Although the two sides are telling different stories, one thing is clear: Fegan did not get along with the senior management of the company that Burkle brought in, including Hank Ratner, former Madison Square Garden chief, who was hired in June 2016. The complaint alleges Fegan’s “campaign” to undermine ISE in favor of his own interests started in at least June of last year, the same time Ratner was hired.
In a statement Fegan issued after he was fired, he said he turned down a lucrative long-term contract for several reasons, including “my opposition to the current senior management structure.”
In another statement, Fegan’s attorney Howard Weitzman said Ratner “from day one has refused to allow [Fegan] to operate the basketball division pursuant to the terms of his contract.”
The complaint filed against Fegan stated that Fegan missed meetings with Ratner and refused to acknowledge Ratner’s authority over him.
The complaint also states that at the time Fegan executed an amendment to his employment contract from 2013, Fegan “gave every indication” that he would assist Ratner and ISE to get the agents to agree to long-term contracts. Before being fired, Fegan refused to engage the other basketball agents in discussions about long-term contracts at ISE, the lawsuit said.
“Fegan simply refused to sign agents to long-term deals,” the lawsuit said, “and when told that it was not in the company’s interest to have its agents unsigned, Fegan said ‘I don’t give a shit about the company.’”
Editor's Note: ISE supplied the following statement, which arrived too late for the print edition:
"ISE decided that due to Dan's misconduct he had to be terminated. The largest shareholder did sit briefly with Mr. Fegan to see if he would behave going forward, including suggesting a possible structure that would completely restrict his ability to conduct business in a conflicted, damaging manner. Mr. Fegan made it clear that he would not agree to align his interests with the company and that nothing was going to change so he was terminated for cause."