Jason ... all I can say is I really, really hope you're on to something with this; I usually like to keep my love of the Hornets and my love of the Saints completely separate, but the city and NOLA exiles around the world could really stand some good news after the last few days of bad, bad sports news. I think it would really lift all our spirits to have permanent local ownership; it would also be in line with Stern's state preference from the moment the League bought the team.
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Add the BP Settlement Proposal to the Ownership Consideration
A legal maneuver turned the tide in the recent CBA negotiations, unexpectedly for those not paying close attention. Did that just happen again, this time affecting the sale of the New Orleans Hornets?
Sometimes it’s the little things. Sometimes it’s a hobbit, or two, or three (sort of) that go unnoticed and change the tide of the war. Our dawnless day here in Hornetshire has lasted a little longer than that, but, as it turns out, one of the barely noticeable decision may win the day, and remove the eye that has been following this team for far too long.
An important development in the BP lawsuit may be that little thing for us to add to our consideration that will put this thing over the line, finally.
Now, there are a few important words here. Let’s focus on the most important one: the.
This is the lawsuit. Around here, there are Super Bowls, and there is the Super Bowl. There are storms, and there is the storm. This is the lawsuit against BP over damages stemming from the oil leak from the Macondo Prospect. (Some people call it a spill. I think most things don’t spill upwards, and a spill means they could have collected this stuff once, which proved to be quite the dickens to do . . . all the king’s horses and all the king’s men could put their collective finger in a hole . . .)
This is enormously complicated, but I have distilled the bits that are important to the sale of the Hornets.
- The lawsuit is a combo platter of many suits on behalf of both businesses and individuals.
- The development is a proposed settlement in that case worth nearly $8B. Since it’s a settlement, it’s likely that this lower than the highest potential payout by BP, which set up a $20B fund, which was considered to be a conservative upper bound.
- Gary Chouest plugged into many companies (example), many of which should have filed for damages in this lawsuit. In fact, Edison Chouest filed a suit to end a moratorium on certain offshore activities. It is reasonable to assume Chouest has filed claims for damages.
- There are existing claims for damages, and this proposal calls for an immediate 60% payout on those claims if they are unpaid or underpaid to that level, then will have to get the rest from the eventual damages in the suit.
- There is no defined timetable for this proposal to be accepted.
If the many business presences of Chouest have filed claims though the earlier process that have not been paid (for those who don’t know, these claims processes are not as smooth as some may think), then this proposal will yield a tremendous windfall.
Further, even if they are skeptical about such a windfall or if the payout is delayed for some reason, then this proposal still clarifies the financial picture of such claims. They will be paid to some extent. BP has admitted complicity and fault for a long while, only really trying to get its partners and subs to share the burden to a degree rather than shirking the volume damages. They can be sure of getting something, and likely know it will be within a year, or a least a nice fraction of it then.
This may allow Gary Chouest to increase his bid by some amount, should he need to, or perhaps confirm a prior bid that was contingent. We’ve heard before that the sale was “done,” and that one group was given exclusive rights to negotiate. Stern, however, did refuse to confirm anything other than
- There are at least two groups involved
- One group is ahead of the other (which has a high `duh’ factor)
While Stern was confident that a deal would get done with that reportedly lead group, if it was done, there would be no second group. So, let’s just dispense with the reported finality, as was previously advised.
Since, also as Stern quoted, “Life is a negotiation,” this potential change in financial posture for Chouest could have effect on the ongoing negotiations. Also, if the lead group is constructed as we have been told, they will not benefit from this, so it’s not a “rising tide” situation.
As this is a windfall, Chouest may be in a a position where this money would be better spend on a buisness for tax purposes. I don’t know, but it’s plausible.
Some may wonder if such legal non-happenings can really affect negotiations materially. As mentioned above, this seems to have been the case with the CBA. In private communications with Ryan and Michael just after the NBPA filed the disclaimer of interest, I told them that I was never more optimistic that a deal would get done. Shortly thereafter, a deal was done in principle, and that deal came to fuitition.
You see, the NBPA did all the could as a union, then used their final card (a threat of a lengthy lawsuit and treble damages) to force a deal in the short term where they gave up little other than the $300m / year everyone knew they would give up. Here, it’s the opposite. This settlement proposal is giving further definition to the net losses experienced by the companies (which is now 100% less already-awarded money), allowing these companies and owners a related amount of fiscal freedom with respect to funds they currently have.
Additionally, this settlement news could affect other local powerbrokers in various shipping and offshore activities, or people involved in law. For instance, Morris Bart declared his interest in a stake in the since the NBA purchased it in December 2010. Does he have a stake in this? He’s in personal injury, sure, but does he? I don’t know.
What about other big names mentioned in the links above? Bollinger? Hornbeck? Others?
How much will this settlement proposal, after all, it’s just a proposal, affect this sale?
How many minority owners will join Chouest, or up their outlay?
I don’t know.
But we should all consider this . . . especially those who can help buy this team . . .