The Oscars were awarded yesterday. How is this relevant to the Thrashers legal battle? Well a few years ago the musical "Chicago" won an Oscar. In general I'm not a big fan of musicals, but "Chicago" had this great scene where a trail is taking place and Richard Gere steps up and pulls off a tap dance to distract the jury from some inconvenient facts. In my opinion that was one of the more entertaining movie scenes of that year.
If you enjoyed Richard Gere's legal tap dance, you should read John Manasso's article in the Atlanta Business Chronicle on the Atlanta Spirit ownership trial up in Maryland. I'm not a lawyer, nor am I a forensic accountant, but "Spirit investor" Todd Foreman was forced to perform some kind of excruciating twists and turns while on the stand last Friday.
While being cross-examined, Mr. Foreman admitted that he had drafted a sales pitch that Atlanta Spirit could used to pursue Atlanta area celebrities like Jermain Dupri, Chris Tucker, Big Boi, Bow Wow and Jamie Foxx. This pitch/offer portrayed the Hawks/Thrashers/Philips Arena entity as worth $350.
Foreman testified only Dupri was presented with a document that showed valuations. Spirit presented Dupri with the opportunity to pay $3.5 million for every 1 percent of the group he chose to purchase for an "implied" value of $350 million. Dupri rejected the measure out of hand, Foreman said, and wanted a piece of the group without putting up any money.
Now that there is a multi-year, multi-million dollar lawsuit over the actual value of the Atlanta Spirit assests, Mr. Foreman is running away from that $350 valuation like a man with his clothes on fire. When Belkin was to be bought out, it was Foreman who supplied information to Citibank (which was trying to place a value on the franchises).
Under persistent questioning as to whether Foreman supplied inaccurate information to Citi for the appraisal, Foreman in the final answer of the morning session was forced to admit that "with regard to that specific piece, yes."
On redirect the lawyer for the DC/ATL owners led Forman though an amazing contortionist performance in which he showed that while the "enterprise value" of the teams was $400 million, once you subtracted obligations to TBS, Philips Arena debt, NHL obligations, deferred compensation and other items the combined value of the teams amounted to a paltry $38 million. Say what!?
This my friends is Exhibit A in the "why I don't trust numbers that NHL owners toss out to fans" when complaining about the "expenses" of owning a team.This was one hell of a tap dance being played on in court last Friday.
Now which is it Mr. Foreman? Are the Hawks/Thrashers/Philips worth the $350--the price you touted to Jermain Dupri--or were they really worth the $38 million? It seems to this non-lawyer that Mr. Foreman either made a nearly fraudulent offer to Mr. Dupri or he made he made a grossly inaccurate statement in court about the true value of the teams. I find it very difficult to believe that both statements could be completely truthful.
This head spinning gap between $350 million and $38 million is simply incongruous. Accounting stunts like these are the reason the NHLPA will exercise the right to audit three NHL teams' books this year (as is their right under the CBA).