Phoenix Suns minority owners Kisco WC Sports and Kent Circle Investments filed a lawsuit in Delaware Chancery Court demanding access to financial records and alleging mismanagement by majority owner Mat Ishbia's organization.
The complaint, originally filed August 21 with a redacted version released Wednesday, accuses Suns Capital Group LLC of refusing to permit inspection of books and financial records. Quinn Emanuel Urquhart & Sullivan attorneys authored the legal challenge on behalf of the minority stakeholders.
Kisco began negotiating a buyout of its interests last September, while Kent Circle expressed "growing concerns" about team management. Both investors claim they cannot properly value their stakes without access to crucial financial documentation.
The lawsuit alleges management issued a June 2 capital call with "no advance notice" after Kisco demanded a response to its buyout offer by June 1. The plaintiffs contend this call was "part of a leverage strategy to exert pressure on and dilute the company's minority owners."
Kisco and Kent Circle argue the per-unit valuation in the capital call was "strikingly low" compared to recent NBA franchise sales. They cite the Boston Celtics' $6.1 billion sale in April and the Lakers' $10 billion transaction as evidence of escalating franchise values.
The complaint suggests Suns Capital Group has "entered into multiple undisclosed side deals with other investors." It also questions funding for the Phoenix Mercury practice facility, allegedly paid for using Suns funds without proper disclosure to minority owners.
The minority owners assert their document demands are authorized by the LLC Agreement and "fundamental concepts of good faith and fair dealing." They argue management has violated equal treatment requirements for capital calls.
Ishbia purchased the Suns for $4 billion in December 2022. The team has not yet responded to requests for comment on the lawsuit allegations.
