Partner: Spirit’s teams costly

Rutherford Seydel testified Wednesday that his share in the Hawks and Thrashers is going to decrease because “I can’t keep up with my partners” in continuing to finance the teams’ ongoing losses.

Seydel said he owns “less than 10 percent” of the teams, which he and seven partners —- known as the Atlanta Spirit —- bought from Turner Broadcasting System four years ago. Turner is being sued for $450 million by Texas businessman David McDavid, who said Turner cheated him out of the teams when it sold them to the Spirit.

The Spirit owners made $60 million in capital contributions from March 2004 through July 2006, according to court documents. Instead of enjoying profits, the owners have had to bail the teams out.

“That’s all we’ve done,” said Seydel, who acknowledged that his ownership stake will decrease if he declines to contribute to additional so-called capital calls to fund the teams.

The teams have been losing money for years, according to testimony and documents. But the exact amount and number of years has never been made clear. Seydel’s testimony was the first time one of the owners gave so much detail in the trial, which started last month in Fulton County Superior Court.

Still, with many financial documents in the case under seal, the full picture is lacking. Seydel’s testimony did not indicate how much capital has been poured in since mid-2006, where the money has gone and what the teams’ bottom line is.

One document —- a list of the capital contributions the owners have made through July 2008 —- was briefly displayed in court to the jury but remains under seal.

Seydel is the son-in-law of Ted Turner, who founded Atlanta-based Turner Broadcasting. The company had been negotiating to sell the teams and Philips Arena’s operating rights to McDavid in 2003. Turner announced in September of that year that it would sell to the Spirit. McDavid then filed the breach-of-contract lawsuit.

Since the Spirit assumed ownership in 2004, the Hawks have a 106-222 record (.323) in four seasons. They made the playoffs last season for the first time in nine years.

After missing a year to the NHL lockout, the Thrashers won their division and made the playoffs for the first time in 2006-07, then were swept in four games in their first-round series against the New York Rangers. The team struggled last season, finishing next-to-last in the Eastern Conference.

The way the sale was structured in March 2004, Seydel and three of the other owners —- Turner’s son, Beau, and Turner’s longtime family friends Michael Gearon Sr. and Michael Gearon Jr. —- received $2 of ownership for every dollar they put in, court documents show.

For Seydel’s part, he invested about 4.4 percent of the capital and received a 9 percent stake in the teams and the arena, court documents show. Seydel’s share, he said in court, was funded with a loan from Gearon Jr. worth as much as $4 million.

“That’s the deal that was originally proposed,” he said. “That’s not how it’s turned out to be.”

Separate from this trial, which may last another two weeks, the Spirit has been involved in a complicated but high-profile court battle, in part over how much the teams are worth and how much co-owner Steve Belkin would receive for selling his 30 percent stake.

Though lawyers have interviewed him, Belkin has not appeared in court in the McDavid case. On Wednesday, Seydel bristled at the mention of Belkin’s name as well as when Steven Rosenwasser, an attorney for McDavid, brought up the other case, which is scheduled to go to trial in Maryland in February.

“Isn’t Mr. Belkin’s attorney sitting behind you? Is there anyone representing Mr. Belkin anywhere in the courtroom?” Seydel asked.

Seydel refused to talk about anything related to how much the teams are worth.