The legal drama surrounding Phoenix Suns owner Mat Ishbia continues to pile up, as two minority owners of the franchise filed yet another lawsuit against Ishbia earlier today. The filing alleges that Ishbia has been using the Suns as his “personal piggy bank”, while also alleging that Ishbia had failed to fund a recent capital call on time properly.
Ishbia’s Legal Troubles Date Back to This Past Summer
Monday’s explosive new filing is just the latest escalation in a legal feud that began during the summer, when Kisco WC Sports II and Kent Circle Investments filed a “books and records suit” against Suns Legacy Holdings LLC, which owns both the Mercury and Suns. The suit, which was filed in August, alleged that Ishbia was guilty of mismanagement, conflicts of interest, and an overall lack of required transparency regarding his ownership of the Suns.
Ishbia then filed a countersuit last month, with the minority owners dropping their suit a few days later, as the attorney for the minority owners, Michael Carlinsky of Quinn Emanuel Urquhart & Sullivan LLP, said the reason for that was that the two parties had “succeeded” in obtaining certain information regarding Ishbia’s alleged fraud. One spokesman for the Suns says that the ongoing legal drama between Ishbia and the minority owners is due to their failed attempt to get Ishbia to buy them out at a premium.
Details Surrounding the Latest Lawsuit Against Ishbia
The first part of the latest lawsuit alleges that Ishbia had missed the deadline that was set for a capital call back on June 2nd. The lawsuit then alleges that Ishbia had attempted hide the fact he missed the deadline, and then partially funded his share on June 9th by converting a prior loan into equity.
The filing also states that Ishbia failed to disclose the missed funding due to a company operating agreement, which states in one part of the agreement that Ishbia is required to offer minority owners the opportunity to buy units he failed to fund. This, as a result, would then cause Ishbia’s stake in the Suns franchise to become diluted.
The Self-Dealing Accusations
The second part of the filing also alleges that Ishbia had engaged in multiple instances of self-dealing over the course of his ownership of the Suns. These instances included a supposed loan that was made to the team at above-market interest rates, and the sale of the naming rights to the arena where the Suns and Mercury play to a company owned by Ishbia, without informing minority owners.
That company that is owned by Ishbia called United Wholesale Mortgage had recently inked a new 10-year $115 million deal to rename the arena Mortgage Matchup Center last month. These examples along with many others is used in the lawsuit that the minority owners say shows Ishbia has been using the team as his own “personal piggy bank”.
What The Suns are Saying About This Latest Lawsuit
Shortly after the filing on Monday, the Suns pushed back on the allegations laid out in the lawsuit. The spokeswoman for the team disputed the notion that Ishbia had been participating in any self-dealing, pointing to Ishbia’s financial contributions in establishing a $2 value menu for both the Suns and Mercury home games, as well as his help in establishing a new local media-rights deal to broadcast games for free to fans in the Phoenix area for the next two years.
The spokeswoman for the Suns ended their statement Monday by saying, “both Andrew Kohlberg and Kent Circle want to drag this organization backward, and they openly admit in this latest filing that investing in the team and its fans ‘makes no business sense’ in the long-term”.
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