DEL.ICIO.USUpdated: 6:57 p.m. October 09, 2008
Trial begins in lawsuit over Hawks, Thrashers sale
The Atlanta Journal-Constitution
Thursday, October 09, 2008
David McDavid had his bags packed and was ready to fly to Atlanta the morning of Sept. 15, 2003, when his brother-in-law called with news.
Steve Dieb, also a business partner of McDavid’s, said that Turner Broadcasting System wasn’t going to sell the Atlanta Hawks, Thrashers and Philips Arena rights to McDavid. The parties had been negotiating that very deal — priced around $350 million — for months.
McDavid, a businessman from Texas, thought Dieb was joking and hung up the phone, his attorney, Lamar Mixson, told a jury in Fulton Superior Court on Thursday morning.
But, in fact, Turner had agreed to sell the teams and arena rights to an eight-man group known as the Atlanta Spirit for $250 million. That group includes Rutherford Seydel, son-in-law of Turner Broadcasting founder Ted Turner, as well as Turner’s son, Beau.
“It was an inside job,” Mixson told the jury.
Mixson’s remarks Thursday kicked off the first day of arguments in the trial of a lawsuit McDavid brought against Turner. He has accused Turner of disregarding an oral agreement to sell 85 percent of the Hawks, Thrashers and the Philips Arena operating rights to him — and then passing his financial information on to the Spirit group. He is asking for $500 million.
Attorneys for McDavid and Turner traded shots during a morning of opening statements. The trial is expected to last at least a month.
Jim Lamberth, an attorney for Turner, said there was never a final deal with McDavid, and a better opportunity came along for Turner.
“The Atlanta Spirit deal was better for TBS,” he told the jury.
McDavid, a former part-owner of the Dallas Mavericks, signed a letter of intent with Turner in April 2003. The letter of intent that said Turner would negotiate exclusively with McDavid expired that July. Turner announced its deal with the Spirit two months later.
“We thought that the Spirit deal was the best deal for our company,” testified Jim McCaffrey, an executive vice president for Turner.
McCaffrey, one of the principal negotiators with McDavid and with the Spirit group, said he and Turner had some “significant material issues” that needed to be worked out with McDavid. They included tax issues and how McDavid was going to handle employee benefits. They also wanted assurance that McDavid would be able to cover $60 million in substitute collateral related to a bond payment-agreement for Philips Arena.
“He agreed to replace it with a shell that had no assets in it. It was an empty shell,” said McCaffrey.
McCaffrey spent most of his time disputing claims from McDavid’s attorneys that the two parties had a deal, and that Turner shared confidential information about McDavid’s bid to assure the Atlanta Spirit it would get the same deal.
McDavid’s attorneys displayed e-mails and letters, including one from Seydel, which asked for “substantially the same terms and conditions now offered by the McDavid group as explained to me in your office.”
McCaffrey denied sharing anything confidential, and said he told Seydel that he was never promised the same deal as McDavid’s.
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