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| Thursday, February 8 | |||||
| Suit throws into question representation for many players | |||||
| NEW YORK – Two prominent baseball agents have sued their
former company, SFX Entertainment Inc., for fraud and asked for $60
million in damages.
The lawsuit throws in question who will represent dozens of
major league players, including Pedro Martinez, Mariano Rivera,
Larry Walker, Moises Alou, Vladimir Guerrero and Jim Thome.
SFX fired agents Jim Bronner and Bob Gilhooley last week after
the suit was filed and put veteran agent Randy Hendricks in charge
of their players and staff.
Bronner and Gilhooley sold their company, Speakers of Sport, to
SFX on Feb. 2, 2000, for $29.76 million plus another $10 million in
possible future payments, according to the suit, filed last Friday
in federal court in Chicago.
SFX then was acquired Aug. 1 by Clear Channel Communications
Inc. for about $3.3 billion in stock.
Because Tom Hicks, the Texas Rangers' controlling owner, is vice
chairman of Clear Channel, and because Clear Channel also owns
small shares of the Colorado Rockies and Tampa Bay Devil Rays,
Bronner and Gilhooley claimed in the lawsuit that the buyout
created a conflict of interest that hampered "their ability to
retain their current existing players as clients" and to "attract
new players as clients."
SFX began its sports acquisitions in June 1998 by purchasing the
business of basketball agent David Falk, who represented Michael
Jordan, for $82.24 million in cash and assumed debt plus 1.5
million shares of stock, which if he hasn't sold it is now 900,000
shares of Clear Channel, worth $54.5 million.
In 1999, SFX bought the baseball business of brothers Randy and
Alan Hendricks for $15.7 million in cash, $5 million in deferred
payments and the chance to earn additional bonuses.
It then acquired the company of Arn Tellem, another baseball
agent, and Speakers of Sport, signing both Bronner and Gilhooley,
who each owned 26 percent of SOS, to $1 million, five-year
contracts.
At that point, SFX represented about 16 percent of players on
40-man rosters, a group that includes Albert Belle, Mike Mussina,
Roger Clemens, Andy Pettitte, Al Leiter and Chuck Knoblauch.
Bronner and Gilhooley's suit said SFX deceived them because, at
the time they sold their business, SFX failed to tell them the
company was negotiating to be acquired by Clear Channel. They said
in the suit that damages were likely to exceed $10 million and
asked for an additional $50 million in punitive damages.
They cited the decision by Juan Gonzalez, their longtime client,
to switch last September to Scott Boras, who then negotiated a $10
million, one-year contract with Cleveland.
They said the failure to complete a tentative $143 million,
eight-year deal between Gonzalez and Detroit last year, saying it
cost them the chance to meet earning requirements that would result
in annual $1.5 million payments.
The contracts Bronner and Gilhooley signed with SFX said they
cannot compete with SFX until after Feb. 2, 2006.
Fernando Cuza, who worked with SOS's Latin American players, is
staying with SFX along with agents Brian David and Pat Rooney, who
also worked for Bronner and Gilhooley.
Randy Hendricks is expected to take over SOS's salary
arbitration cases.
SFX spokeswoman Alyson Sadofsky declined comment other than to
say her company's position was that the "suit was completely
without merit and that SFX would move immediately to dismiss it."
"SFX further indicated that it was confident the company would
prevail in this dispute after documentary evidence and testimony
are presented in the appropriate forum," she said.
The case was assigned to U.S. District Judge Elaine E. Bucklo.
Gilhooley declined comment Thursday and Bronner could not be
contacted. The Hendricks brothers did not respond to telephone
messages.
| ALSO SEE Rivera's arbitration hearing on hold due to infighting among agents | ||||