The Benson case is a perfect example of how a strategy that made sense years ago no longer works, and in this case, making changes is a big problem.
Negotiations and court battles continue for Tom Benson, owner of the New Orleans Saints football team. Benson is trying to remove team ownership shares from family trust funds. His latest proposal to the NFL was rejected.
The NFL won't let Benson personally guarantee promissory notes he offered in exchange for Saints shares held in trust funds created for his daughter and grandchildren, as reported in The Times-Picayune article, “NFL rejects Tom Benson's ownership deal with estranged family's trusts.”
The 89-year-old Benson disowned his daughter and two grandchildren after a bitter fallout a few years ago. According to Benson, he intends to leave full ownership of the Saints to his wife Gayle and has been trying to revoke the trust funds' shares.
Benson sued in federal court after the trustees guarding the funds blocked his attempt to remove assets in exchange for 30-year promissory notes, including about $375 million for the team’s shares. The offer also includes an attempt to remove shares in the Pelicans, the NBA franchise he also owns. The trust funds allow for assets to be removed, but only in exchange for other assets of equal value.
Court filings show the NFL's finance rules won't allow Benson to use his personal wealth, which includes his controlling, voting stock in the Saints, to back the proposed promissory notes. With that arrangement, the trusts could try to seize Benson's personal assets—including the controlling stock—if he were to default on the notes.
The trustees, attorneys Robert Rosenthal and Mary Rowe, and Benson announced this summer that a tentative settlement was reached. The promissory notes in the exchange were contingent on NFL approval. In August, a U.S. District Judge scheduled a trial after settlement talks didn’t result in a final agreement.
Benson recently filed an amended lawsuit with a new offer of promissory notes based on a January 2015 value of the team. Rowe's attorneys responded, claiming that because the NFL rejected Benson's first offer, any new deal must be based on the current value of the teams, which would be higher.
The court has been asked to schedule a hearing on this issue, and Benson’s attorney maintains that he has a legal right to make a change. A trial is scheduled for February 6.
Forbes estimates the September 2016 value of the Saints at $1.75 billion with an estimated $358 million in annual revenue.
Reference: The Times-Picayune (September 30, 2016) “NFL rejects Tom Benson's ownership deal with estranged family's trusts”