A trio of Diamondbacks minority owners have filed a lawsuit against the franchise’s managing general partner Ken Kendrick, according to a report from Zach Buchanan of The Athletic. The plaintiffs allege that Kendrick illegally forced them to either increase their stake in the Diamondbacks or have their shares bought out by the team. Kendrick argues that he and the team were within their rights to issue such an ultimatum.
The dispute stems from a letter in which Kendrick instructed minority owners with stakes of less than one percent to either increase their share to at least that threshold or to sell their shares back to the team at a price determined by a third-party appraiser. That decision was motivated by the Diamondbacks’ desire to “streamline its ownership group” and decrease the number of owners with minimal stakes in the franchise.
That initiative was backed by MLB, which “prefers” that teams maintain smaller ownership groups to facilitate more efficient governance. However, the suing owners argue that since the idea originated with the Diamondbacks and was brought to MLB for approval, the minority owners maintain their status as eligible holders.
For what it’s worth, Buchanan went on to say via Twitter that the lawsuit is in no way related to the team’s ballpark concerns, which have prompted rumors about relocation. Since the three stakeholders involved in the lawsuit all own less than one percent of the team, Buchanan says, “they have no governing power over it,” and therefore the franchise could relocate with them on board. Kendrick and team president and CEO Derrick Hall spoke in February about the team’s stadium situation, hinting at a persisting hope to construct a new ballpark (be it in Arizona or elsewhere). The team’s stadium lease with Maricopa County would allow the D-Backs to leave Chase Field as early as 2022.
It’ll be a story worth following as the suit progresses, and we’ll be sure to provide updates for you as they come.
Man I love sports.
ah, sports news to hold us over during this trying time.
At least there’s some sort of action going on in baseball
If he had the right to do so I don’t see why people are upset.
I am not an attorney nor do I have the contract so I have no idea.
But what I see from the outside he didn’t do anything wrong
I obviously don’t have the first clue re: this specific situation. But in general, small minority owners usually are restricted in the sense that when they choose to sell, they must offer their stake back to the general partner first before going to market and often there is a right of first refusal (in addition to the previously mentioned right of first offer). But barring some event where the owners are requested to all add liquidity and some fault to do so, or some other breach of contract, it is rare to have a forced buyout situation. I can’t imagine groups being enthusiastic about investing millions into a venture in which they cannot freely choose the point in which they exit it. The DBacks are in a very strong position for near term success. If I were a minority owner I’d want to wait until the revenues are realized from that success before selling, and not before.
The dispute stems from a letter in which Kendrick instructed minority owners with stakes of less than one percent to either increase their share to at least that threshold or to sell their shares back to the team at a price determined by a third-party appraiser
I doubt a contract they signed contains language that says: I can determine the % you need to be at to be a minority owner at any given time I choose and if you do not meet this arbitrarily set rule I can determine whenever you must give me back the shares you own….
Shows why majority of Americans look upon lawyers with utter contempt.
Country could (and would) do well with a 50% reduction in the numbers and amount of useless work created for them by their own pensmanship.. As in creating a “need” for themselves with rubbish like in this topic.
How much $$$ is thrown away to them yearly? Vultures.
As much as the police departments can charge people with crimes with. 99% of America lives in a police state and they don’t even realize it.
Police agencies don’t charge people with crimes. They enforce and the courts administrate (file charges, trial and if guilty sentence) not the police.
Shows how much you know lol. Police dont charge people with crimes.
No, They arrest (enforcement). The District Attorney or City Attorney file the charges. If they feel police have met the elements of the crime, the Courts adjudicate the matter. If the D.A. feels there is not sufficient evidence charges are not filed.
Not giving back shares, buying them back. Difference.
Minority owners rarely have many rights and are usually as the mercy of the majority owner(s). I doubt they come out on top but may be able to delay the inevitable.
You don’t get a direct line to Jeff Bezos’ private cell to call him any time and tell him what to do when you buy 1 share of Amazon.
Well golly
It is only entertainment. Life will go on with or without it.
Definitely a case for My Cousin Vinny….
Millionaires fighting. Yawn.
The ultra-rich have problems too, just with more zeroes.
Even obnoxious baseball money politics is welcome news these days.
As an accountant, I find this story fascinating.
Couldn’t the three owners in question merge their funds to become one group? Maybe two loan their stakes to the third guy and he pays them back.
I have to imagine these men are business owners and cash is very tight with the economy being shutdown….
Ironic timing to be asking for this… share value determined by 3rd party…. what’s the value when the team has no revenue right now and no set date of when it will start to. Asking anyone in these times to kick up more cash to buy more of the team is just shady
TJ, that’s what the ultra-rich do. They use high-pressure situations to get what they want. They’re betting the three small owners don’t have access to capital. The timing isn’t a coincidence. Very high stakes poker. #BillionaireGames.
This has been in the works since last year when Kendrick got permission from MLB. You know, not everything is a conspiracy.
We need a billionaire to buy everyones minoritie stakes in all teams there are any and increase their stake to 51%.
I’m more concerned with the idea they need a new ballpark! Just like Atlanta, who got a new stadium after a very short stint with the previous new stadium! Insanity!!
Get Judge Judy to settle this
Seriously why did MLB approve the 2 minority owners if they would rather have it where the team had less owners????
MLB had a crystal ball foreseeing this situation happening? Seriously, what are you trying to imply?
I’m implying that if MLB doesn’t want a team to be owned by a bunch of minority owners, than why did they approve it to begin with.
MLB allows it. This isn’t some revelation.
Reads like General Partner made a”cash call” for the ownership group to bring in more money to offset a tight cashflow situation brought about by MLB shutdown and lack of revenues etc..
And, GP is cutting these owners out of future revenue increases from any new stadium deal etc…
Lawsuit
may be justified, but we need nore facts.
This actually happens more often than you think. Nolan Ryan was given the same ultimatum by the Rangers several years back. They don’t want teams treated like a public entity with thousands of shareholders (albeit that sounds hypocritical being that there are businesses that own teams), so if they can consolidate, it works out better for MLB. Single ownership also promotes higher payrolls without the restrictions large corporations would have on payroll.
Announce the move to Henderson, NV already. Jeez.