Liverpool owners Fenway Sports Group are continuing to fight legal action in the US following the acquisition of the Pittsburgh Penguins NHL team.
Back in November the Penguins became the fourth sporting team to become part of the FSG empire when John Henry and Tom Werner closed on a deal with the NHL team's ownership, with the valuation of the Pittsburgh franchise in the region of $900m.
The Penguins acquisition is set to kick off a period of further takeovers of sporting property, with an NBA team top of the list and potential targets in football markets such as Brazil, with FSG accelerating its 'FSG 3.0' phase, aided by the $750m investment for 11 per cent of the FSG empire by RedBird Capital Partners last year.
And while FSG have formally taken the helm in Pittsburgh from Mario Lemieux and Ron Burkle, both of whom remain as part of the Penguins' management structure, they have had to contend with a legal challenge from one of the Penguins' minority partners who claim that they were made unaware of the deal until 20 minutes before it went public.
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Wildfire Productions invested around $5m into the Penguins between 1999 and 2000, an investment that has grown. Wildfire claim to own a 7.54 per cent stake in the Lemieux Group, whom FSG acquired the Penguins from, and are contesting the decision for the sale to be given the green light, with two separate lawsuits having been filed in the US; one in the Delaware Chancery Court and one in the US District Court for the Western District of Pennsylvania.
In the suit, Wildfire, who are seeking to make the deal "null and void", claim: "Through clandestine back-room manoeuvring, Mr Burkle and Mr Lemieux are orchestrating an unlawful cash-out for themselves, while steamrolling and freezing out their limited partners, including Wildfire."
Wildfire claim that 'Team Lemieux', the general partner of the firm, "deliberately ignored" the consent rights that existed when conducting the sale of the team to FSG, with Wildfire also claiming in the suit that Burkle and Lemieux sought to amend the partnership agreement prior to the sale so that they would only need a majority of partners to agree instead of unanimous approval.
"The attempted amendment destroys the fundamental bargain at the heart of this partnership," Wildfire said in the suit.
"It puts in place a revolving door for the general partner position, while locking Wildfire in place, devaluing its interest in the partnership, and leaving it subject to the whims of the new general partner with whom Wildfire did not consent to be partners."
Wildfire's stance is rejected by FSG attorneys.
Published court documents, first reported via Sportico, state: "Wildfire, knew about FSG’s planned acquisition of a controlling stake in Lemieux Group LP for over six weeks before the Transaction closed. In that time, Wildfire never attempted to stop the close of the transaction."
FSG also argue that a lawsuit should be thrown out and the two parties have the matter resolved via arbitration, with FSG's legal team pointing to a consent agreement signed in 1999 partners agreed to resolve various forms of conflicts through such a process, the arbitrator being the NHL commissioner. Such a move makes it a private matter and not a public one and means that sensitive details relating to the case are not required to be made public.
Last week Pennsylvania federal Judge Marilyn Horan imposed a halt to court proceedings until the outcome of the case filed at the Delaware Court of Chancery, where Wildfire claim a breach of contract and breach of fiduciary duty against Team Lemieux. The case lodged in the US District Court for the Western District of Pennsylvania hinges specifically on FSG, claiming it 'aided and abetted a breach of fiduciary duty and wrongfully interfered with contractual relations.
FSG's position is that they do not comment on ongoing legal matters.
