DETROIT (Reuters) - In a Texas-sized legal battle, billionaire Ross Perot Jr. filed a lawsuit this week, accusing fellow billionaire Mark Cuban of driving the Dallas Mavericks basketball team into insolvency.
A Perot-controlled company with a 5-percent stake in the National Basketball Association team -- Hillwood Investment Properties -- charged Cuban’s Dallas Basketball Ltd (DBL), which operates the Mavericks, with breach of contract, disregarding the rights of minority owners and breach of fiduciary duty, according to the lawsuit filed in a Texas state court.
“It is insolvent and/or in imminent danger of insolvency,” Hillwood said of the NBA team in the lawsuit filed on Monday.
“DBL currently does not have revenues sufficient to pay its operating costs, and without additional borrowings, DBL will not be able to fund its projected operating losses or to pay its obligations as they become due,” according to the lawsuit.
Perot’s Hillwood is seeking unspecified damages and attorney costs, claiming Cuban’s operation of the team has hurt the value of his investment in the Mavericks. Perot sold Cuban control of the team in 2000.
Perot, who is worth $1.4 billion according to Forbes magazine, also requested through Hillwood that the court appoint a receiver to operate the NBA team and name an independent forensic accountant to investigate its finances, according to the lawsuit. Cuban owns about 76 percent of the team, according to the lawsuit.
Cuban, worth $2.4 billion according to Forbes, could not be reached to comment, but said in an email to the Dallas Morning News that the team was not insolvent.
“Mavs fans have nothing to worry about,” he told the newspaper. “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.”
DBL has lost more than $273 million in Cuban’s nine years of operating the team, including more than $50 million in the fiscal year ended in June 2009, according to the Perot lawsuit. DBL’s debt now likely tops $200 million and the team’s internal projections show the projected interest-bearing debt balance reaching more than $281 million by June 2013, according to the lawsuit.
Cuban told the News he is the team’s largest debtholder and personally guarantees the rest, and suggested Perot might be seeking a buyout. However, Cuban added there was no chance he would lose control of the Mavericks.
Cuban, who has turned the Mavericks into a winning team that regularly makes the postseason, has a range of business interests. His hot temper when arguing with referees during Mavericks games has earned him millions of dollars in fines, while his dancing skills landed him on the television show “Dancing With the Stars.”
He also owns HDNet, a national high-definition television network, and Landmark Theatres. Magnolia Pictures, the theatrical and home entertainment distribution company that he co-owns through the company 2929 Entertainment, released the documentary “Enron: Smartest Guys in the Room.”
Perot is a real estate developer and co-founded computer services company Perot Systems Corp along with his father and former U.S. presidential candidate Ross Perot. That company was later sold to Dell Inc.
The case is Hillwood Investment Properties III Ltd v. Radical Mavericks Management LLC et al, Dallas County Court, No. 10-05639.
Editing by Gerald E. McCormick