• Submitted by: admin
• Sports
• 05 / 12 / 2010

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Mark Cuban’s financial management of the Dallas Mavericks was described as “reckless” in a lawsuit filed Monday in Texas by a minority investor in the team who accused the flamboyant billionaire owner of amassing net losses of $273 million and debt of more than $200 million, The New York Times’s Richard Sandomir reports.

Ross Perot Jr., who sold Mr. Cuban control of the team in 2000 but retained a small stake, said in the state court filing that the team was essentially insolvent and lacked the revenue to pay its debts.

Mr. Perot is seeking damages, the naming of a receiver to take over the team and the appointment of a forensic accountant to investigate its finances. Mr. Perot said Mr. Cuban’s actions diminished the value of his investment in the team and violated
his and other minority owners’ rights.

The lawsuit partly opens the Mavericks’ books, showing some results and projections. Mr. Perot said the team generated a net loss of more than $50 million in the year ended June 2009 and a net cash flow deficit of $176 million since 2001.

Looking ahead, Mr. Perot said that internal projections show additional losses of $92 million through 2013 and debt rising to $281 million.

In an e-mail message to The Dallas Morning News, Mr. Cuban said: “The Mavs operations and debt are guaranteed by me.

There is no risk of insolvency. Everyone always has been and will be paid on time.” He added that “being in business with Ross Perot is one of the worst experiences of my business life. He could care less about Mavs fans. He could care less about winning.”

Adam Silver, the deputy commissioner of the N.B.A., said the league had “absolutely no concern” about Mr. Cuban’s financial situation. In an e-mail message, he said, “We are in the process of addressing our teams’ ongoing losses through the collective bargaining process with our players.”

Mr. Cuban acquired the Mavericks for $285 million from Mr. Perot during the 1999-2000 season and quickly turned it into a winning franchise that has made the playoffs every year since 2001. The lawsuit said Mr. Cuban owned 76 percent of the team.

He has become one of the most famous and boisterous owners in sports, sitting courtside at home games, wearing a T-shirt and acting like a passionate fan. He has accumulated about $2 million in fines from the N.B.A., mostly for criticizing officiating.

The accusation that the Mavericks have too much debt and are insolvent is resonant in the Dallas area.

Stung by the global credit crisis, Thomas O. Hicks’s sports company, which owns the Texas Rangers and the Dallas Stars, stopped paying interest on $525 million in debt in March 2009, and Mr. Hicks has put the Rangers and the Stars up for sale.

A group led by Chuck Greenberg and Nolan Ryan has agreed to pay $575 million for the Rangers, but the sale is embroiled in a dispute among Mr. Hicks, his lenders and Major League Baseball.

Source: dealbook.blogs.nytimes.com/