British private equity firm suing agents, Stealth SME founders
XXIII Capital Ltd., a company based in the United Kingdom, brought a lawsuit against the Goodwins, as well as Dorsey James and Christopher Aden, the founders of the former Stealth SME, and several business entities containing the name Decade in New York federal court last month.
The lawsuit alleges XXIII Capital loaned $16 million in cash and extended a $4 million line of credit to Decade in February 2016 to finance the acquisition of sports agencies, including Goodwin Associates Management Enterprises and Goodwin Sports Management, which are owned by the Goodwin brothers. Aden and James, who founded Stealth, an agency which has since ceased operations, are the principals of Decade, according to the lawsuit.
“Just over 18 months ago, Plaintiff loaned Defendants millions of dollars so Defendants could launch their business,” the lawsuit states. “Now, Defendants hide, divert, secrete and improperly spend the very proceeds from which Defendants agreed Plaintiff would receive repayment,” the complaint alleges.
The lawsuit is seeking actual damages of more than $22 million, which includes interest on the loans, as well as attorneys fees and other costs.
Keith Miller, a partner in law firm Perkins Coie, which is representing the NBA agent brothers in the matter, said, “The Goodwins should not be involved in this lawsuit.”
“There was a transaction that took place and whether it was a valid transaction is going to be the subject of litigation,” Miller said, of the Goodwins selling their agencies to Decade.
Attempts to reach James and Aden were unsuccessful. Neither had filed legal responses to the lawsuit as of midweek last week.
Evan Farber, a partner at law firm Loeb & Loeb, which is representing XXIII Capital in the case, declined to comment.
The lawsuit alleges that the defendants agreed, under the terms of loan agreements, to make payments to XXIII Capital into a “lockbox.” As of September, defendants should have deposited more than $11.55 million into the lockbox, but have deposited only $1.462 million, “leaving a glaring shortfall of $10.1 million,” the lawsuit states.
The case was filed Sept. 12. On Sept. 13, U.S. District Judge Gregory Woods issued a temporary restraining order against the defendants, barring them from “diverting, secreting, hiding, wasting, spending, appropriating, or subverting any Collateral, including future receivables and the payments” that are owed to XXIII Capital.
Miller said that the Goodwins were included in that TRO “in error” and that Woods held a hearing Sept. 25 in which he indicated that he would rescind the TRO as it applied to the Goodwins.
“He recognized that that was in error,” Miller said. “That he [Woods] had heard one side of the story, but after hearing our side of the story, rescinded the TRO and denied plaintiffs request for an injunction against the Goodwins.”
Woods had not issued an order to reflect that by midweek last week.
> MORE THAN HALF PASS NFLPA AGENT TEST: More than half of the prospective agents who took the NFL Players Association contract advisers certification exam this summer passed it, an increase over recent years.
Two hundred twenty men and women sat for the test, and 120 of them passed it.
Last year 45 percent of the test-takers passed, and in 2015 only 38.7 percent passed.
Until 2015, the agent test had a pass rate of about 70 percent. The NFLPA first began administering the test to prospective agents in 2001.
The union in 2015 raised the bar for passing the test in response to a desire by player leaders to have more qualified agents.
> CAA SIGNS RUOCCO: Creative Artists Agency has signed Ryan Ruocco, an ESPN play-by-play announcer for NBA and WNBA games, for representation.
A team of agents across CAA will represent him. He was formerly represented by ICM Partners.
At age 30, Ruocco is one of the youngest ESPN play-by-play announcers. He also works for the YES Network as a play-by-play announcer for the Brooklyn Nets and the New York Yankees and is an on-air host for The Players’ Tribune, including for its popular R2C2 podcast with Yankees pitcher CC Sabathia.