It will be interesting to hear what Crane says tomorrow and what Drayton has to say about it. I have no doubt that Drayton upsold Crane on the opportunity. That said, Crane had to know until the carriage contracts were signed with the providers nothing was a sure thing. This sounds like Crane is having a hard time cutting his own "lucrative" deal if now his position was that he was flim flammed.
http://blog.chron.com/sportsupdate/...rayton-mclane-comcast-and-nbc-claiming-fraud/ State Court Lawsuit
So....within the same day we've got Crane telling the press that the carriage fee is a fair price and something doesn't add up since Comcast isn't making it work.....and turns around suing that he was defrauded when he bought the team because the carriage fee was grossly inflated? Great stand up guy at the helm.
If they can prove that Comcast and McLane knew in 2010 that they couldn't get what they were promising Crane they were going to get, then that's the very basis of a fraud claim. I have no idea if that is what really happened or not. But if it did...or more to the point, if it can be proven they did...then the Astros ownership group is going to get a chunk of change out of this AND potentially have all their attorney's fees paid by McLane pursuant to the purchase agreement. Said when this started that somewhere, someone either with McLane's group and/or Comcast made some representations to Crane that he relied on to form basis of the purchase price. That's due diligence. When you call up and speak to Jon Litner, president of comcast sports directly, that's about as good as it gets. Petition alleges that Litner and Comcast knew they couldn't get the rates they were promising, but they promised them to Crane anyway because Comcast got "most favored nation" status.
Since this lawsuit is regarding the very formation of the allegedly bankrupt entity, (presumably) the real value of the allegedly bankrupt entity, and the alleged misrepresentations by the Comcast partner (and thus the management dispute that led to the BK filing), I would be very tempted to have this case removed to the bankruptcy court as an adversary proceeding. However, the judge may not be able to rule on such ancillary matters under the Supreme Court ruling in Stern v. Marshall.
This seems like it will become a fascinating case study in how not to buy and operate a professional sports franchise years from now. Where I come from, we call that "buyer beware". JFC, what an absolute disaster Crane's ownership tenure has been... I cannot believe that the Rockets crawled into bed with this sleezy moron.
That's true for buying something on EBay or Craigslist, but not for a multimillion dollar corporation. You can't materially lie about your finances. If you do, then that is pretty straightforward fraud. "Buyer Beware" is one of those stupid fun-to-say statements to say like "the customer is always right". It's total nonsense. At this point, though, we have no idea if what is alleged is true. What is sleazy about this, exactly? Should he NOT sue if Drayton/Comcast committed fraud?
In transactions like these you get representations and warranties from the seller and you attempt to get them from 3rd parties who have information that affects the purchase price. If they withhold key information from you...or tell you lies...that's the basis of a fraud claim. I have no idea if that's what actually happened...but that's what is being alleged.
I don't see it. The misrepresentations were allegedly about CSN...but its about how those misrepresentations affected the purchase price of the Astros....that forms the damage model. CSN, the alleged bankrupt party, isn't a party to the state court suit.
It is technically separate from the bankruptcy case because Crane is not actually suing the debtor in that cast (CSN Houston), but rather McLane and Comcast/NBC.
The weird thing is the timing of it. Crane is alleging that now he found out about the "Zone 1" rate for Comcast was inflated back in late 2012, but he continues to argue that the rate they are asking the other providers for are reasonable? Also, I get the part about McLane allegedly lying to Crane to get Crane to pay a heftier price for the Astros assets, including the CSN-H interest, than he otherwise would have. But what is supposed to be Comcast/NBC's interest in helping McLane with this fraud? They don't get a piece of the purchase price, do they? And what about the Rockets? Why did Les Alexander agree to get involved in this whole mess if he knew back when they talked about the Zone 1 rate that CSN-H was not going to be profitable?
I'm a 1L law student, so although my knowledge is limited, this line struck me as very odd: " However, the suit claims, Comcast, NBC Universal and McLane agreed to “conceal material information” – namely, the inflated Zone 1 rates – when McLane sold the team to Crane’s group in 2011. " Crane's attorneys can't allege such claims without having some non-frivolous backing for these fraudulent charges. It will be interesting to see how this case develops.
