CASPER
New member
DALLAS (AP)—Dallas Mavericks owner Mark Cuban is accused of wrongfully diverting millions of dollars from the NBA franchise’s home arena to help make up for cash shortfalls incurred by the team, according to a lawsuit filed by a company controlled by the team’s former owner.
The lawsuit claims Cuban covered the Mavericks’ financial shortfalls by obtaining more than $29 million in unauthorized loans through a limited partnership designed to distribute profits from the arena, the American Airlines Center. It accuses the Mavericks and three other companies controlled by Cuban of breach of contract, breach of fiduciary duty and unjust enrichment.
The company that filed the suit, Hillwood Center Partners, is controlled by former Mavericks owner Ross Perot Jr. and holds a small interest in the arena’s limited partnership, Radical Arena. A related Perot company sold the Mavericks to Cuban in 2000.
Cuban declined comment in an e-mail to The Associated Press. The lawsuit was filed Wednesday in state district court in Dallas, and a copy was obtained Monday by the AP.
Hillwood spokesman Eddie Reeves said the company tried unsuccessfully to resolve its issue with Cuban before filing the lawsuit.
“At this point, we feel this is the only option we are left,” he said.
The suit claims Cuban, acting as Radical Arena’s general partner, caused the partnership to make multiple loans to the Mavericks instead of distributing the funds within the corporation. The first loan was made in September 2006 and provided the Mavericks with $20 million at an interest rate of 5.4 percent, according to the lawsuit.
The transaction allowed the Mavericks to enjoy terms “substantially more favorable” than those the team would have obtained from an independent or unrelated lender, according to the suit. By not guaranteeing repayment of the note, Cuban avoided personal liability and obtained a substantial benefit for himself, the lawsuit alleges.
Cuban has twice extended the maturity dates of the loan and borrowed an additional $8.1 million, it said. At the same time, the loan’s interest rate was reduced to 3.5 percent, according to the suit.
The lawsuit claims Cuban covered the Mavericks’ financial shortfalls by obtaining more than $29 million in unauthorized loans through a limited partnership designed to distribute profits from the arena, the American Airlines Center. It accuses the Mavericks and three other companies controlled by Cuban of breach of contract, breach of fiduciary duty and unjust enrichment.
The company that filed the suit, Hillwood Center Partners, is controlled by former Mavericks owner Ross Perot Jr. and holds a small interest in the arena’s limited partnership, Radical Arena. A related Perot company sold the Mavericks to Cuban in 2000.
Cuban declined comment in an e-mail to The Associated Press. The lawsuit was filed Wednesday in state district court in Dallas, and a copy was obtained Monday by the AP.
Hillwood spokesman Eddie Reeves said the company tried unsuccessfully to resolve its issue with Cuban before filing the lawsuit.
“At this point, we feel this is the only option we are left,” he said.
The suit claims Cuban, acting as Radical Arena’s general partner, caused the partnership to make multiple loans to the Mavericks instead of distributing the funds within the corporation. The first loan was made in September 2006 and provided the Mavericks with $20 million at an interest rate of 5.4 percent, according to the lawsuit.
The transaction allowed the Mavericks to enjoy terms “substantially more favorable” than those the team would have obtained from an independent or unrelated lender, according to the suit. By not guaranteeing repayment of the note, Cuban avoided personal liability and obtained a substantial benefit for himself, the lawsuit alleges.
Cuban has twice extended the maturity dates of the loan and borrowed an additional $8.1 million, it said. At the same time, the loan’s interest rate was reduced to 3.5 percent, according to the suit.