Don Carter Sues Tom Hicks Over Millions Sunk Into Land Around Ballparks in Arlington, Frisco
|Photo by Mike Mezeul|
|Don Carter at Love Field, upon the Mavs' triumphant return from Miami in June|
Says Carter, since 2002 he's been the only "non-Hicks controlled partner" in the partnership, and that he "never refused to provide capital" when Hicks asked for it. But in '06, writes Carter attorney Steven DeWolf, Carter "became increasingly concerned as to Hicks' use of the money and began to ask pointed questions." At which point, the suit alleges, Hicks stopped asking for money and began borrowing from himself -- and "most of these 'loans' accrued interest at 8%, a rate considerably higher than bank lending rates at the time or currently." By March of last year, says the suit, the loans totaled more than $31 million in principal -- $35 million, if not much more, once you add in interest. From the suit:
Then Carter takes issue with the "artificially low and below market value pricing" set for parking around the Ballpark when Hicks was owner, which, "while good for the Texas Rangers' fans and the Rangers ... it was not in the Partners' best interest." Carter also says he's been trying to get financials out of Hicks for months and hasn't seen anything. Which is why he wants the court to appoint a receiver -- to find out what's going on, where his money is and what Hicks done did with it.
Hicks engaged in this scheme in a deliberate effort to undermine Carter's interest in Partners and to avoid accountability for his proliferate and wasteful spending on the "Glory Park" project near Rangers Ballpark. Under the Agreement, upon dissolution, loans are to be paid before any distribution to the equity holders. Thus, Hicks and his affiliate company, Hicks, Inc., are assured of receiving their "loans" back plus a generous return of 8% before Carter receives a dime.
Messages have been left for DeWolf and Hicks's reps; expect updates later in the day. Till then, you know the drill: Docs follow.
Update 5:03 p.m.: Steve DeWolf called back and explained why Carter, a man not known for filing lawsuits, decided to do so here.
Update at 5:40 p.m.: Hicks has also responded via a statement just forwarded to Unfair Park. It too follows.
DeWolf says Carter didn't want to take this to the courthouse and did everything he could to keep it from becoming a legal matter. Says the former Mavs owner's attorney, Carter invested "well north of $10 million" in the partnership over the last nine years, but had become increasingly concerned about how that money was being spent, as the suit indicates.
"They're required to give us financial statements every three months, but he hasn't seen one for six months," DeWolf says. "He's gotten some financial statements, and there's all sorts of issues on what happened to the money and whether it was appropriate. We do know the partnership, even though you'd think those would be valuable assets, doesn't seem to be doing particularly well. .. [And] to the best of our knowledge there's $2 million advanced to a Hicks-related entity, and it doesn't have anything to do with the partnership and hasn't been repaid, which is a bit of a problem. And then there's the whole pattern of doing the loans for 8 percent. We've asked for the partnership to be dissolved, and they've never taken any steps to wind it up."
Adds the attorney: Carter "just wants out of the partnership and to be paid back the reasonable value of his partnership interest. Mr. Carter's not a litigious guy. So this isn't his desire. Let's split the sheets, do it in a reasonable and honorable way, and let's move on. He did what I think was the honorable thing: He wrote a letter and said, 'Let's sit down and talk about this,' and didn't get the courtesy of a response."
Speaking of: We're still waiting on a statement from Hicks's people. It will be posted when it arrives.
Update at 5:40: Here is Hicks's response, in full:
"I admire and respect Don Carter. That's why we have been investment partners in a number of ventures including the land around the Ballpark as well as the Texas Rangers and Dallas Stars. It is certainly well-documented that I, as well as a very small number of investors, lost a lot of money on the sports teams. That does not mean, however, that I agree with the assertions in the lawsuit. All the transactions and business decisions have been completely transparent to Don and his representatives. Notably, keeping the parking rates artificially low benefited the team but the decision benefited minority investors, including Don, because the team needed every possible tactic to get customers to the Ballpark. I will refrain from further comment at this time because I am hopeful that we can resolve this matter quickly and amicably after a review of the long-standing agreements we have with Don and his family."Don Carter v Tom Hicks