DALLAS (CN) – Hillwood Center Partners, controlled by former Dallas Mavericks majority owner Ross Perot Jr., claims the team’s current owner Mark Cuban diverted millions of dollars in profits from the team’s arena to cover shortfalls in the basketball team’s budget.
The complaint in Dallas County Court claims that Cuban and his businesses – Radical Cuban LLC, Radical Arena Ltd. and the Dallas Mavericks – breached agreements with Hillwood when he issued more than $29 million in loans from Radical Arena to the Mavericks instead of distributing the profits to partners.
Radical Arena is a partnership that owns a portion of Center Operating Company LP, which operates the American Airlines Center arena. Cuban controls 92.5 percent of Radical Arena; Hillwood has the rest.
“I can only offer my opinion, which is that Ross Perot Jr. must be desperate from the losses he has suffered from Victory and his hedge funds,” Cuban said in an email in response to the suit. “My lawyers have been open with our minority partners, and in Mr. Perot’s case, very minority, about the loans to the Mavericks.”
According to the complaint, Perot – the son of the former independent presidential candidate – sold his majority stake in the Mavericks to Cuban in April of 2000. Cuban now owns 76 percent of the club.
“The financial aspects of the business of the Mavericks have suffered substantially, causing the Mavericks to have to rely heavily on borrowings to meet ongoing financial obligations,” Hillwood says in its complaint. “The AAC, on the other hand, has enjoyed economic success and has made substantial profit distributions to its owners, one of which is Radical Arena. Those profits have not been distributed to the owners of Radical Arena.”
Cuban responded: “It is my understanding that Mr. Perot has received legal notice of the loans since they began, right after the Mavs appearance in the Finals as we tried to improve the team further. Only he knows why he has chosen to file a lawsuit and to make it public. The unfortunate reality is that this is the nature of our business relationship with Mr. Perot. From all I can tell, he could care less if the Mavs ever win a game. I have to tell you that the biggest mistake I made in buying the Mavs was in not completely buying out his interest.”
Cuban says the loans he took were used to put the best possible basketball team on the court, which brought sold-out games and attracted business to Perot’s Victory development, which surrounds the arena.
“As best I could tell, he was very happy to take advantage of the traffic when he had an economic interest in Victory to do so,” Cuban said. “Unfortunately for Mr. Perot, he was apparently unable to capitalize on the benefit and is trying to find nickels in the sofa cushion.”
Hillwood alleges breach of contract, breach of fiduciary duty and unjust enrichment. It is represented by Mark Davenport with Figari Davenport.