Proskauer, O'Melveny Headline Record-Setting Panthers Deal
The largest-ever sale of a National Football League franchise has its roots in a recent U.S. Supreme Court ruling and the #MeToo movement.
May 16, 2018 at 08:07 AM
6 minute read
At least three law firms home to some of the best-known legal dealmakers in the sports world have landed lead roles on a $2.2 billion all-cash deal announced Tuesday that will see billionaire hedge fund manager David Tepper take control of the National Football League's Carolina Panthers.
The team, owned since its inception in 1993 by former NFL player and Hardee's fast food restaurant franchisee Jerry Richardson Sr., in January retained Proskauer Rose chairman Joseph Leccese and William “Billy” Moore of leading North Carolina firm Moore & Van Allen to handle a proposed sale.
O'Melveny & Myers sports industry co-chairs Charles Baker and Irwin Raij are counseling Tepper on the transaction, which requires the approval of at least 24 of 32 NFL team owners. Tepper is already a minority owner of the NFL's Pittsburgh Steelers following an ownership restructuring by that franchise nearly a decade ago, so a sale of the Panthers should be finalized shortly, according to news reports.
Baker joined O'Melveny & Myers in January 2017 from DLA Piper, while Raij came aboard a few months later from Foley & Lardner. The American Lawyer recently reported on Raij's role as an owner himself of Major League Soccer's Los Angeles Football Club. On a teaching visit last month at the University of Miami School of Law, Raij and Baker led students through an M&A seminar related to sports teams.
The proposed sale of the Panthers to Tepper, who has promised to keep the team in Charlotte, represents one of the largest sums ever paid for a professional sports franchise in North America. In September, former lawyer Leslie Alexander sold the National Basketball Association's Houston Rockets for $2.2 billion to casino and hospitality billionaire Tilman Fertitta, a deal that yielded roles for Baker Botts, DLA Piper and White & Case.
In April, former Sullivan & Cromwell associate Joseph Tsai, a co-founder of Chinese e-commerce giant Alibaba Group Holding Ltd., turned to his old firm to advise on his purchase of a 49 percent stake in the NBA's Brooklyn Nets from Russian oligarch Mikhail Prokhorov, who was advised by Hogan Lovells. That deal, which comes nearly a decade after Prokhorov took control of the Nets for a mere $200 million, now values the NBA team at roughly $2.3 billion.
The soaring valuations of professional sports franchises, particularly in North America, and the cottage industry of transactional work involving the means by which they change hands were the subject of a feature story by The American Lawyer in 2015.
Proskauer's Leccese, who assumed leadership of the high-powered firm in late 2010, is now leading a team advising Richardson on the sale of the Panthers. Other Proskauer lawyers working on the matter include sports law partner Frank Saviano, tax partner Amanda Nussbaum, labor and employment partner Howard Robbins, employee benefits partner Steven Weinstein, insurance recovery and counseling partner John Failla, intellectual property partner Daryn Grossman, private client partner Mitchell Gaswirth and senior counsel Nathaniel Birdsall, special environmental counsel Aliza Cinamon, senior antitrust counsel John Ingrassia and associates Justin Alex, Carlu Francheschini, Benjamin Freeman, Daniel Hatten, Jason Joffe, Bowon Koh, Jason Krochak, Tiffany Quach and Jennifer Rigterink.
Proskauer also advised last year on the $1.2 billion sale of Major League Baseball's Miami Marlins and the $1.4 billion sale of the NFL's Buffalo Bills in 2014. On the Panthers deal, Proskauer and Moore & Van Allen worked closely with noted sports industry dealmaker Stephen Greenberg, a managing director at New York-based investment bank Allen & Co. and a former managing partner of Manatt, Phelps & Phillips. All were retained earlier this year after Richardson said he would sell the team following the publication of a lengthy story by Sports Illustrated in mid-December accusing the Panthers owner of making sexually suggestive remarks and acts with team employees and personnel. The story claimed that at least four former Panthers employees had received “significant” financial settlements from the team.
In late April, an anonymous former Panthers employee detailed some of Richardson's workplace misconduct in a first-person narrative published by Sports Illustrated. The Panthers had previously announced that Quinn Emanuel Urquhart & Sullivan and former White House chief of staff Erskine Bowles, a limited owner in the team, would conduct an internal probe into Richardson's alleged actions. Moore & Van Allen alum Richard Thigpen has long served as general counsel for the Panthers, while Stephen Argeris, a former sportswriter, is deputy general counsel and director of compliance for the franchise.
Shortly before the Super Bowl, the NFL took over that internal investigation by the Panthers, hiring Debevoise & Plimpton senior chair Mary Jo White to handle the matter. White, who also serves as leader of Debevoise's strategic crisis response and solutions group, has not yet completed her work for the league. The American Lawyer reported earlier this year on White acknowledging a technical snafu in Debevoise's work investigating a sexual harassment scandal at the University of Rochester.
On Monday, the U.S. Supreme Court issued a landmark ruling legalizing sports betting throughout the country, something that the NFL had long opposed, along with other major professional sports leagues in North America and the National Collegiate Athletic Association. While the ramifications of that 6-3 decision allowing states to legalize sports betting are not yet clear, Mark Cuban, a billionaire investor and owner of the NBA's Dallas Mavericks, said publicly this week that it could double the valuations of top professional sports teams, although others are less certain that there will be any noticeable change to valuations.
Kirkland & Ellis represented the NCAA, the NFL and other sports leagues at the Supreme Court and records on file with the U.S. Senate show that the NFL paid $50,000 during the first quarter of 2018 to its longtime outside counsel at Covington & Burling to lobby on several issues, including a federal prohibition on sports betting. The NFL gave up its nonprofit tax status in 2015.
As for Tepper, the founder and president of Miami Beach-based hedge fund Appaloosa Management LP, he will sell his 5 percent stake in the Steelers if NFL owners approve his purchase of the Panthers. The $2.2 billion sum paid for the team has been closely watched in NFL circles because other franchises, such as the Denver Broncos, New Orleans Saints and Tennessee Titans, could come up for sale in future years, generating more transactional work for sports industry lawyers.
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