Yesterday, an important ruling was handed down in a legal case with enormous implications for the New Orleans Pelicans, New Orleans Saints, and the rest of Tom Benson’s Empire. The ruling denied the attempt to declare Tom Benson incapable of running his various business entities. This denial, however, does nothing but keep the succession battle on the course it was on prior to the attempt. In fact, there could actually be a benefit to the heirs in the facts of the case.

Background

We detailed Tom Benson’s change to his succession plans in January. The ownership of Benson’s Empire is complicated, and he really has a concentration of control more than a concentration of ownership to be clear, but the change to the plan would rearrange which assets would be controlled by Ms. Gayle and which by Ms. Renee, Rita, and Ryan, who are his daughter and her two children. Again This is very much about control and not about money.

Key Issue

As stated above, the (property) issue is not about the current value of the assets his heirs will receive. Rather, it is the form that value takes. Prior to the change, Ms. Renee, Rita, and Ryan would have controlled the Saints and Pelicans. After the change, they would not, and Ms. Gayle would.

There is a mechanism that allows for these kinds of changes in certain ownership styles, and the one in question appears to be an Intentionally Defective Trust. In order to execute this change, the value of the assets being swapped must be equal. Additionally, the assets being added to the trust can not be less “sound” than the ones being removed. For example, a $100,000 in cash can not be swapped for land valued at $100,000 whose value has been declining and is expected to decline further for some external reason.

When Benson tried to exchange the assets, the executor of the trust, the person in change of making sure the transactions related to trust assets are such that they protect these assets, refused to execute the swap. The refusal was justified by him by not knowing the current values of the franchises, rendering it impossible to maintain his fiduciary duty if he executed the swap. Such a misstep would have been very bad for him.

This attempt is central to the battle.

Path Forward

There will be more cases going forward regarding the legality of various transactions. This is where the details of the interdiction case matter. the mental health experts all agreed that Benson suffers from some impairment at his age. While not surprising for someone of Benson’s age, the establishment of some degree of impairment adds risk of challenge to future decision Benson may make.

Expect challenges on esoteric legal points and on values of the franchises at various times. It’s going to be complicated, it’s going to be ugly, and it’s going to be drawn out.

Final Note

We are covering this because it concerns the Pelicans, and we are trying to give a clear analysis of the facts, not just the facts, related to the team. The real story here is not about property, but about people, and a fractured family in particular. It’s truly very sad, and the best possible outcome is a healing of the family. Accounts lead us to believe that this is improbable. We are not qualified to speak on the details of their family dynamic, but we are very much qualified to wish them the best and ask that you all do so, too, while we enjoy our season tickets, cheer on our teams, and dream of title after title after title.