Stretch provision

[DBoys]

Okay, I follow what you're saying, but in general the if-waived stretch provision in Haywood's contract is essentially a completely different issue from the "deferred compensation" that can be a part of every NBA contract. That huge deferred comp total owed by Dallas almost certainly arose NOT from stretch payouts when waived, but rather from contracted pay schedules for fully completed seasons as a Mav.

For all we know, other NBA teams could very well have similar obligations. On the other hand, there's always been bad blood between Cuban and Perot, and the idea that Cuban would try to make the Mavs as a whole (and therefore Perot's share) have negative value makes perfect sense. The corporation that owns the team borrows from Cuban to handle negative cash flow, and he personally gets interest plus a lien against the club, and Perot ends up with shares in something of no value ...extreme hardball business, not very nice, but not unique as a means to get rid of an undesired minority "partner."

[turk3d]

The part that I find interesting here (as an addition) is that Cuban sees the Mavs as marketing/advertising for himself and his other business enterprises (has parlayed his ownership into somewhat of a TV career, i.e., Dancing with the Stars and now Shark Tank). He's a brilliant businessman.

He spends whatever he can to improve the brand at the same time accumulating debt for the team which gets passed on to Perot and the shareholders. And to him, he doesn't care if they lose money. It's all about branding and as long as his other business enterprises are doing well (which they are) I can see him being pretty happy.

I suppose if/when he sells one day, he leaves the rest of them holding the bag. Almost reminds me a little of a "Loss Leader" approach in a way. I can see Perots concerns.

[DBoys]

The part that I find interesting here (as an addition) is that Cuban sees the Mavs as marketing/advertising for himself and his other business enterprises (has parlayed his ownership into somewhat of a TV career, i.e., Dancing with the Stars and now Shark Tank). He's a brilliant businessman.

He spends whatever he can to improve the brand at the same time accumulating debt for the team which gets passed on to Perot and the shareholders. And to him, he doesn't care if they lose money. It's all about branding and as long as his other business enterprises are doing well (which they are) I can see him being pretty happy.

I suppose if/when he sells one day, he leaves the rest of them holding the bag. Almost reminds me a little of a "Loss Leader" approach in a way. I can see Perots concerns.

Cuban has stated under oath that he is willing to buy out Perot at FMV. Perot's trying to coat-tail on Cuban's work, be a thorn in Cuban's side, and can get out anytime he wants, so I wouldn't feel sorry for him ...and besides, he's a big boy who plays the same game too.

[turk3d]

That's good for Perot but what about the rest of the shareholders? And what is FMV? Don't you take debt into consideration in determining that? Does that mean he'll pay market price and not take that into consideration in determining it? I can see a few people upset.

And even if he were to agree to the original purchase price I don't know how appealing that would necessarily be since I'm sure when Perot bought in (and this includes all the shareholders) that their intent would be to more than just breakeven. Maybe if he agreed to purchase their shares for the original purchase price plus some agreed upon % increase for even year owned might be more to their liking.

[DBoys]

From what I understand, the shareholders are very few. I know of Cuban and his long-time partner Todd Wagner. Perot. And maybe the original owner Don Carter still has a tiny slice. That may be all of them.

Cuban tried to completely buy out Perot from the day he bought the team (Perot was the former owner, not someone who has bought a slice at a later time.) By all appearances Carter and Cuban get along great and hold each other in high esteem.

[DBoys]

FYI a bit of objective perspective - the view of the courts. "Summary judgment" is basically a rout, in legal terms.

Updated: November 4, 2011, 12:22 PM ET By Jeff Caplan | ESPNDallas.com

Mark Cuban, owner of the world champion Dallas Mavericks, can't currently watch his team on the court, so he'll have to settle for his recent victory in the court system against disgruntled minority team owner Ross Perot Jr.

A judge last week denied all claims made by Perot, putting an end to this latest round of lawsuits by Perot charging Cuban with mismanaging the Mavericks' franchise.

Cuban, reached via email, said he had no comment on the conclusion of this case or if he believes this will put an end to Perot's continual challenges to his stewardship.

"We are extremely pleased with the ruling, which puts the Mavericks in the win column before the season has even started," Cuban's attorney Thomas Melsheimer said Thursday.

In June, Perot sued Cuban for mismanaging the team. Perot claimed in the lawsuit that Cuban made "a litany of questionable business, financial and personal decisions" regarding the Mavs and that Cuban was "careless and reckless" in his decision-making, causing Perot's Hillwood Investment Properties III, Ltd., to "lose substantial investment value."

Perot also sought to have the team taken away from Cuban and handed over to a court-appointed receiver.

Melsheimer responded with a court brief to dismiss the suit. It included a piece of evidence that Cuban's legal team believed accurately conveyed Cuban's management: a photograph of the Mavs celebrating their 2010-11 NBA championship, hoisting the Larry O'Brien Trophy.

It included a brief caption: "On June 12, 2011, the World Champion Dallas Mavericks defeated the Miami Heat to claim the franchise's first NBA championship. A true and correct photo of one of the many victory celebrations is incorporated herein.

"Under Hillwood's ownership, the team was deemed the 'worst franchise' in all of professional sports. Under Cuban's stewardship the Mavericks have become one of the league's most successful teams and are now NBA champions. Accordingly, there can be no genuine question that Hillwood's claims of mismanagement lack merit and Hillwood's claims should be disposed of on summary judgment."

Last Friday, Judge Craig Smith agreed and put an end to the suit with a final summary judgment that read: "It is ordered that Plaintiff Hillwood Investment Properties III, Ltd. take nothing against Defendants Radical Mavericks Management, LLC and Dallas Basketball Limited d/b/a/ Dallas Mavericks, that all claims asserted by Plaintiff are denied, and that all costs of court be taxed against Plaintiff."

For more than two years, Perot has made various claims accusing Cuban of mismanaging the team. In July 2009, Perot, who still owns a five percent stake in the team, sued Cuban over money made from the American Airlines Center, alleging millions of dollars that should have gone to partners was wrongfully diverted to the Mavericks to cover substantial shortfalls.

In May 2010, Perot raised the stakes with another lawsuit that alleged the Mavs' debt exceeded $200 million and the franchise was "insolvent and/or in imminent danger of insolvency."

Cuban provided a snarky response to that lawsuit, saying that Perot was "trying to find nickels in the sofa cushion."

[Skin]

Can teams use the Stretch Provision every year? Or is it a one time deal?

[HartfordWhalers]

DBoys,

I'm pretty sure the judge dismissed the suit against Cuban on the fact that there was no basis for asking the court to examine the question of if Cuban was mismanaging the team, not on an evaluation of if the debt and mismanagement 'concerns' were valid.

Can teams use the Stretch Provision every year? Or is it a one time deal?

Every year, but only on new contracts. You could stretch several people at once.

[Skin]

DBoys,

I'm pretty sure the judge dismissed the suit against Cuban on the fact that there was no basis for asking the court to examine the question of if Cuban was mismanaging the team, not on an evaluation of if the debt and mismanagement 'concerns' were valid.

Can teams use the Stretch Provision every year? Or is it a one time deal?

Every year, but only on new contracts. You could stretch several people at once.

By new contracts you mean post new CBA contracts right? That's an incredible out for teams if true.

The Magic for example would be able to Stretch Jason Richardson and Glen Davis if they wanted?

[DBoys]

DBoys,

I'm pretty sure the judge dismissed the suit against Cuban on the fact that there was no basis for asking the court to examine the question of if Cuban was mismanaging the team, not on an evaluation of if the debt and mismanagement 'concerns' were valid..

The "concerns" were the basis for the "mismanagement" suit. The case was summarily dismissed. To me that would be a clear determination that those concerns weren't legally valid.

[DBoys]

Skin, you can stretch all contracts signed under the new CBA, if waived ...but only those contracts. Signed under 2005 CBA can't be done that way (it's amnesty or nothing, on those). There is no limit to how many stretch-waivers a team can do or when, but there is a cumulative limit as to what percentage of your cap can be tied up in dead money in any year (15%).

[HartfordWhalers]

DBoys,

I'm pretty sure the judge dismissed the suit against Cuban on the fact that there was no basis for asking the court to examine the question of if Cuban was mismanaging the team, not on an evaluation of if the debt and mismanagement 'concerns' were valid..

The "concerns" were the basis for the "mismanagement" suit. The case was summarily dismissed. To me that would be a clear determination that those concerns weren't legally valid.

It was a bit ago, but I'm just about positive it was that those concerns had no legal standing and in that sense weren't legally valid, not that they factually content of whether the team was mismanaged was being decided as lacking, or even judged at all (there was no reason to). Or put alternatively, the court's decision effectively said even if Cuban is mismanaging the team, so what?

[Skin]

Skin, you can stretch all contracts signed under the new CBA, if waived ...but only those contracts. Signed under 2005 CBA can't be done that way (it's amnesty or nothing, on those). There is no limit to how many stretch-waivers a team can do or when, but there is a cumulative limit as to what percentage of your cap can be tied up in dead money in any year (15%).

Thank you very much DBoys! Great info.