DEL.ICIO.USUpdated: 6:27 p.m. December 09, 2008
Turner owes $281M in Hawks-Thrashers lawsuit
Texas businessman sued after teams, arena rights were sold to Atlanta Spirit group
The Atlanta Journal-Constitution
Tuesday, December 09, 2008
A jury ruled Tuesday that Turner Broadcasting System owes Texas businessman David McDavid $281 million for a breach of contract when it negotiated with — and eventually sold — the Hawks, Thrashers and Philips Arena operating rights to another bidder.
The decision does not mean McDavid now owns the teams. They remain in the hands of the Atlanta Spirit, an eight-member group of investors.
Associated Press
The jury’s decision does not mean that Texas businessman David McDavid now owns the teams. They remain in the hands of the Atlanta Spirit.
An appeal by Atlanta-based Turner Broadcasting, which is owned by Time Warner, is possible.
“Even for Time Warner, (that amount) is something that will get people’s attention,” said Alan Gould, an analyst with Natixis Bleichroeder, an investment bank in New York.
McDavid signed a letter of intent with Turner to buy the teams and arena rights in April 2003. The letter, granting exclusive negotiations, expired 45 days later, but the parties continued to talk. Turner announced in September of that year it was selling the teams to the Spirit.
The investors included the son and son-in-law of Ted Turner, founder of the Atlanta-based media company.
McDavid sued the company for $450 million in Fulton County Superior Court, accusing executives of four misdeeds. They included breaking an oral contract to sell the teams and arena rights as well as sharing his confidential financial information with the Spirit.
In the unanimous verdict Tuesday, the jury said Turner owes McDavid $281 million for disregarding a verbal deal and $35 million for essentially breaking a promise. The two amounts cannot be added together because of complicated legal reasons, so McDavid’s side said it will pick the larger one.
The jury ruled against McDavid on the two other counts. It said Turner Broadcasting did not share confidential information and did not commit fraud.
“We’re just very glad to have our day in court,” McDavid said in the courtroom immediately after the verdict. “It’s been five long years. We’re glad that a jury of 12 Georgians saw the validity of our claim. To us, it was never about the money, it was about the principle.”
Misty Skedgell, a Turner Broadcasting spokeswoman, said the company will weigh its appeal options.
“We are disappointed with the decision of the court and the jury’s interpretation of the facts in what was a complex business transaction,” she said. “We will carefully consider all options, including appeal and will announce any plans at the appropriate time.”
The trial started in early October. The jury had been deliberating since last Wednesday.
“Nothing was easy; we were split 50-50 to start,” said Ashish Gogia, the jury foreman, outside the courtroom. “We all walked in today not thinking we could get it done today.”
The first amount the jury awarded — $281 million — primarily represents the fair market value of the teams at the time of the sale minus the amount McDavid would have paid for them.
“It was as if he had the sale, and they were his teams,” Gogia said.
During the trial, McDavid’s lawyers pointed to several things to show that Turner Broadcasting had an agreement with McDavid. That included: a letter from Turner to Time Warner’s board asking for approval to sell the teams to McDavid; a draft press release announcing the deal with McDavid; and reams of documents that represented a purchase-and-sale agreement. They said the Spirit group was unfairly favored because Ted Turner’s son Beau and son-in-law Rutherford Seydel were among its partners.
For their part, Turner’s attorneys said those company memos and press releases were standard operating procedure and that none of the documents between the company and McDavid were ever signed. And, Turner executives as well as a few Spirit investors who testified said they never spoke with Ted Turner about the deal.
Gogia said in the end, it was all about who was telling the truth. That, and witnesses for McDavid testifying that Turner Broadcasting CEO Phil Kent said on a telephone call, “We have a deal.”
“The plaintiff’s side seemed a lot more truthful in how they handled the business negotiations,” he said. “For the defense, it seems like a lot of people were not on the same page. The witnesses — they were not on the same page.”
— Staff writer Paul Donsky contributed to this article.
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