NBA Concerned About McDavid Finances in 2003

The David McDavid v. Turner Broadcasting trial continues in Fulton County Superior Court.

McDavid claims that Turner Broadcasting did an end run and sold the Atlanta Hawks, Atlanta Thrashers, and Philips Arena to Atlanta Spirit LLC after he had an agreement to pick up the assets on his own.

But the NBA had their own worries about McDavid and his attempted financing of the purchase of the Hawks.

According to testimony, McDavid admitted his own net worth was in the neighborhood of US$180-million. He was set to purchase the Hawks, Thrashers, and Philips for $60-million up front with another $20-million financed- all cash.

In the article from Kristi Swartz in the Atlanta Journal-Constitution, NBA exec Joel Litvin expressed a league concern:

“Given that the losses this team was certain to incur, losses that probably would exceed the $20 million he had remaining, that would have been a concern,” Litvin testified. “We want to make sure that the owners of our franchises have the wherewithal to fund the teams in a first-class manner.”

The Hawks recorded losses of just over US$31-million in 2002-2003.

McDavid had negotiated with Turner and signed a letter of intent in April of 2003. His exclusivity window for negotiations closed, and Turner announced in September of that year that they were selling to "Atlanta Spirit, LLC." McDavid has since sued Turner for US$450-million in a breach of contract suit.

Turner has always maintained that the deal to sell to Atlanta Spirit was a better one for Turner- eventhough only US$8-million was put on the table up front in cash. The group had to pony up another US$115-million in personal guarantees against the projected losses of the franchises.

Those losses were close to US$250-million from 2002 through 2005 according to internal projections from Turner Broadcasting.

If all these figures haven't confused the ever-loving hell out of you by now... the trial is set to conclude some time next week.

That is, of course, until there is an appeal.

That will mean the only winner in the case to date will be the corporate lawyers on both sides.