Liverpool owners Fenway Sports Group have reached an amicable solution to end a legal dispute relating to their purchase of the Pittsburgh Penguins ice hockey team.
FSG closed on the acquisition of the NHL franchise in November 2021 in a deal worth a reported $900m but soon found themselves in a legal wrangle after a minority partner, Wildfire Productions LP, challenged the sale of the team from Team Lemieux LLC to FSG, claiming that they had not been consulted appropriately.
Shortly after the deal was concluded the deal found itself dragged before Delaware Chancery Court after a Wildfire claimed that they had been unlawfully excluded from the discussions over the sale of the team and not afforded the same opportunities as other minority partners in the deal. Wildfire's initial claim was that they only found out about the deal 20 minutes before it was made public, something that was contested by FSG attorneys.
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Wildfire invested around $5m into the Penguins between 1999 and 2000, an investment that had grown. Wildfire claimed to own a 7.54 per cent stake in Team Lemieux, the former holding company owned by Ron Burkle and Penguins legend Mario Lemieux, and were 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 were seeking to make the deal "null and void", claimed: "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 claimed 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.
Legal representatives for Wildfire, who had brought suits against Team Lemieux LLC in Delaware and FSG in Western Pennsylvania, argued that the takeover would leave Wildfire Productions LLC "at the whims of FSG" and were seeking the takeover deal to be voided by the Court.
According to Court filings, FSG attorneys argued: "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's legal team had made the case that the issue should be resolved through arbitration, where the commissioner of the league itself, in this case the NHL, seeks to resolve the issue between the two parties. FSG's legal team argued that legal relationship between Lemieux Group partners and the NHL features the signing of a consent agreement in 1999, where partners agreed to resolve disputes via arbitration.
The lawsuit was dismissed in June by the Delaware Chancery Court and the baton was passed to NHL commissioner Gary Bettman to arbitrate and find a resolution, something that has now come to pass, according to the Pittsburgh-based Tribune-Review newspaper.
Daniel Shapira, counsel for Wildfire, said via a statement that appeared in the Tribune-Review: "An agreement was reached with Team Lemieux LLC, Fenway Sports Group, and others to resolve all disputes between them. As part of the settlement, the NHL has approved the sale of Wildfire’s limited partner interest, and Wildfire no longer owns any interest in the Penguins. Wildfire wishes FSG and the Penguins the best of luck going forward."
The Penguins purchase became the fourth sports team to be added to the FSG portfolio, a deal that took the value of the empire to $10bn after it was added to the existing assets of Liverpool, the Boston Red Sox baseball team and the RFK Racing NASCAR outfit.
FSG last month opened themselves up to interest in a full sale of Liverpool, with the Reds owners having one eye on acquiring an NBA expansion franchise in Las Vegas in the next two to three years, although the ECHO has been informed by well-placed US sources that the preference would be to sell a minority stake in the Reds to a "strategic partner" that could aid their growth plans and help them tap into new revenue streams.
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