Huge difference between "lying about your finances" and making promises about future valuations of something. Sleaze reference wasn't made towards this deal in particular, just Craney-ness in general. Crane's mark as an owner so far strikes me as a dude who was looking to make a quick buck and not a guy interested in a long term investment... which, as a franchise owner (or a fan), is a recipe for utter failure.
Yes and no. If they were making guesstimates and talking about potential valuation, that's one thing. But if McLane said that Comcast told them A, while Comcast never told them any such thing or actually told them B, then that's still lying about the finances and thus fraud.
George Postolos is going to have a hard time finding future work as a sports franchise purchasing consultant. This is the guy that Crane needs to be mad at, not Drayton. Everyone and their dog knew the Astros were going for about $100 million too much. Crane has been in over his head from the get go. I would guess he's having serious difficulty finding his own deal for Astros games and has resorted to this suit. He has not named the Rockets in the suit. So the Rockets were completely oblivious to how over priced the value of the network was, or just didn't care? It just doesn't add up to me. Hasn't Crane been saying all along that the network has a certain value in all of his negotiations with the various carriers? Now he's saying it doesn't? If the case has merit, will the Astros be calling the Rockets as a witness to confirm revenue numbers or network values that they were promised by Comcast? Is it Drayton's fault if the cable carriage/sattellite landscape has changed since the time of purchase? Sometimes the market changes and I can't see how that is anyone's fault. That just falls under the category of s*** happens.
I actually feel kind of embarrassed for the guy, honestly. It looks to me like Crane has just figured out that he was "pantsed" in front of the entire city and is trying to find some way forward that will preserve some dignity. Unless he's got tape recordings of conspirators conspiring, I don't see how he thinks he can prove any of this, and as such it doesn't seem like a very well thought out move. If he doesn't win, this has a pretty good chance of turning into a very slo-mo public meltdown along the lines of Frank McCourt in LA.
It touches on the valuation issues and the inability to obtain profitable carriage agreements to support that valuation. Many of those facts that will need to be proven were facts that were pled in the motion to appoint a trustee. I think the connection is flimsy, but it is there. However, the more I think about it. The more I think there would be a Stern v. Marshall problem.
In a valuation you would have incorporated a discount rate or risk factor based on being able to get additional carries to sign up for TV rights. Even if Drayton said there is a 90% chance that Directv/ATT would sign up and shows it in his valuation model, Crane should have made his own model and surveyed that risk percentage independently. The only way there would be an issue here is if Drayton, behind the scenes, is telling Directv/ATT to not sign up and such, but I don't see any incentive there to do that.
Lawsuit alleges that the carrot for Comcast was getting "most favored nation" status...that they would always pay lowest subscriber rate, no matter what, for CSN-H.
You can resolve the bankruptcy entirely without every reaching an adjudication of Crane's claims against McLane and the gang. You can resolve and reach adjudication of Crane's claims against McLane and the gang without burdening or slowing down the bankruptcy at all. In addition, I'm next to certain that there are clauses in the sales contract that provide that venue for any dispute between buyer (Crane) and seller (McLane) has to be in a state district court in Harris County. This case probably won't see its first trial setting for at least 12 months...and realistically, it probably don't actually reach trial for 24 months. There's just no reason to burden the CSN-H bankruptcy with that proceeding, because it doesn't address the issues that CSN is facing at this point.
In the petition, Crane is alleging that Comcast had very specific information that only they would have (think of all the info in the hearing that was kept from the public because Comcast alleged it was proprietary -- similar information to that)...and that Comcast shared it with McLane after CSN was set up. And that Crane specifically asked questions and went to Comcast and to McLane with questions only they could answer...and that they knew he was relying on them...and that they withheld specific information at points and made some overt misrepresentations. And Crane is saying he relied on that to his own detriment. This is a very classic fraud case. Very typical. It's just the parties are atypical in that they're very newsworthy.
Don Selig got the McCourts out of baseball. I wonder if he can do the same with Crane. I hate the fact that we have a penny rubber as an owner. He just over his head in the amount of debt this team has.
I think you underestimate sports team values. The kings went for 535mil. I wouldn't be surprised if the Astros went for a 800-1billion dollars.
Execept as EMJohn has stated, Crane cries fraud about the rates on the same day he is calling them fair. Seems the satute of limitations would have run out if Crane hadn't filed. This is a backup plan.
@dfbarron: Here is the Comcast/NBC Universal response to the lawsuit filed Thursday by Astros owner Jim Crane alleging fraud in the @CSNHouston sale. "Comcast/NBCUniversal vehemently rejects any claim of wrongdoing asserted by the Astros. This litigation outside the bankruptcy proceedings is a desperate act, committed during a period in which Mr. Crane and his team and his team of sophisticated advisors have been granted by the Bankruptcy Court an opportunity to explore and effectuate solutions to the Network’s serious business problems. Instead, it appears that Mr. Crane is suffering from an extreme case of buyer's remorse and aiming to blame the Network's challenges on anything but his own actions Comcast/NBCUniversal looks forward to vindicating itself in this litigation and also remains committed to a reorganization of the Network in Bankruptcy Court." End of statement.
You certainly don't let limitations expire on claims with a damage model this significant. The positions on rates are in the alternative. They're "fair" because he's saying (and has been saying all along) that Comcast told him they could be expected and were fair. Comcast is the experienced party. It's reasonable to expect that everyone would be relying on Comcast to inform decisions on what could be expected from other providers in their industry. But in the alternative...if they're not fair...then we were lied to...and you knew we were relying on you, Comcast...and our reliance has caused us damage. The very essence of a fraud/negligent misrepresentation case. One possibility...McLane is in his 70's. He doesn't want this fight in Houston. He's extremely image-conscious. They go into a room with Comcast and chip away at the purchase price of the Astros enough to make Crane drop the suit. I'm not saying that's going to happen...I just think of all the possible outcomes, that's the most likely. Most cases resolve themselves before trial because the risk of going to trial; paying your attorneys along the way; having a judgment entered against you...and then having to pay Crane's attorney's fees as well. That's a worst case scenario risk that's probably worth negotiating away.
I have handled hundreds of M&A transactions over the last 30+ years. Obviously I don't know the specifics of who told what to whom, or what representations and warranties were made in the Astros purchase agreement, but I do understand the customs and practices of purchasing a business. It would be very rare for any seller to represent and warrant future values or revenue streams - that's why buyers retain investment bankers. My gut reaction is that Crane's claim is an uphill battle at best, unless the sellers were extremely stupid or underhanded, which is always a possibility. If Crane's attorneys can uncover some embarrassing facts through the discovery process, they may have enough leverage to extract some kind of financial settlement. This case will never go to trial. Crane comes off poorly IMO, no matter how this spins out.
My business partner does the same thing. Handles major transactions. He's being saying for about 6 months now that this case is coming. That there were almost certainly representations made by Comcast folks in the midst of due diligence regarding information that they would have that no one else would have unless it were shared with them. And if they KNEW something was amiss about the numbers they were saying they were going to get...and they both told Crane that as he alleged...then I think that's a problem I'm with you 100% that this case will never go to trial. I'd be very surprised. Difficult to comment too much on this, though, having never seen the contract.
