(CN) – Ross Perot Jr. claims the Dallas Mavericks are buried under more than $200 million in debt, which he blames on a “litany of questionable business, financial, and personnel decisions” by majority owner Mark Cuban.
Perot’s Hillwood Investment Properties, which owns 5 percent of the team, sued Cuban’s Radical Mavericks Management and Dallas Basketball Limited, alleging that the team is mismanaged and in danger of insolvency.
In a derivative complaint on behalf of the NBA team in Dallas County Court, Perot asks the court to appoint a receiver to manage the team.
Perot sold controlling interest in the Mavericks to Cuban in 2000. Since then the team has had a net loss of $273 million: “nearly a seven-fold increase in the negative account in that nine-year period,” according to the complaint.
Perot says the Mavericks owe more than $200 million, and that there is “no assurance” that the lenders will pay for an additional projected operating loss of $92 million in the next 4 fiscal years.
“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,” the complaint states.
Perot says part of the problem is that Cuban has taken money from the team and given it to affiliates, including MLW Aviation and HDNet.
“These related-party transactions provided value to these RMM or Cuban-related affiliates, at the expense of DBL, due to them not being made on competitive, arms-length terms,” the complaint states. “That absence of fair value has contributed to the current poor financial condition of DBL.”
Cuban told The Dallas Morning News on Monday that the team is not insolvent and that “Mavs fans have nothing to worry about.”
Hillwood Properties sued for breach of contract, minority oppression and breach of fiduciary duty. It seeks damages, appointment of a receiver and a forensic accountant to take a look at the team’s books.
The Perot-controlled company is represented by Mark Davenport with Figari & Davenport.