Wednesday, June 11, 2008
Millions in Preds loan under cloud
By Brad Schrade • Staff Writer (Tennessean) • June 11, 2008 A national arena management company is suing Predators minority owner William J. “Boots” Del Biaggio III, claiming he misled and defrauded them in a $7 million loan last year to help buy the team. The lawsuit by AEG Facilities, Inc. is the fifth suit filed against Del Biaggio in the past two weeks, each claiming he defrauded lenders. The AEG suit is the second related directly to the purchase of the Predators last December. Modern Bank filed suit June 2 to recover $10 million it loaned Del Biaggio to help purchase the team last year. AEG Facilities is a division of AEG, a worldwide entertainment company which manages numerous sports facilities and owns pro teams, including the Los Angeles Kings hockey team. Del Biaggio until last year had an agreement with AEG to try to move a hockey team to Kansas City, where the company manages and owns a stake in the new Sprint Center. AEG’s suit filed Friday in Superior Court in Santa Clara, California came the same day Del Biaggio filed for bankruptcy in Northern California. He owes approximately $70 million to creditors, but has only about $50 million in assets, according to his attorney. A copy of the lawsuit claims that on Oct. 29 last year, AEG loaned Del Biaggio the money. He used various securities he claimed to owned as collateral, the suit claims. Two of the three investment accounts Del Biaggio claimed to own were not his and documentation was “fraudulently altered” to make it appear he owned them, the suit claims. Merriman, Curhan, Ford & Co, an investment company, and Scott Cacchione, are named co-defendants in the lawsuit. Del Biaggio is also facing a federal investigation into his dealings. Del Biaggio owns a 27 percent stake in the Predators. He was the only major out-of-town investor in a group led by local businessman David Freeman. The group bought the team from Craig Leipold last December. The bankruptcy filing Friday revealed that he also owed Leipold $10 million. It was unclear in the bankruptcy documents whether that money was related to the Preds purchase. Leipold and the team would not comment about the details of that debt.The team maintains that Del Biaggio’s troubles will not impact the Predators operations. The team is reportedly seeking to buy him out or find other investors to purchase his stake. That process could be complicated by the bankruptcy filing last week. Metro could face exposure if his troubles impact the team. The city owns the Sommet Center and restructured the team's lease just months, offering favorable terms to help the team operate. In exchange, Del Biaggio and other owners personally guaranteed money to Metro in event they default on the lease or leave town early. Metro Sports Authority, the city’s landlord for its pro sports facilities, will meet Friday to discuss what legal options it may pursue in the wake of Del Biaggio's financial problems.