Dea Spanos vs. Dean Spanos

[Boltinloudguy]

So then the Chargers might be able to win a SB in 2026 or 2027. What’s another few years of suffering. Hopefully Bezos holds off to buy until then. Then he can hire football people to run a football organization. Or whoever the new owners are.

[Trumpet Man]

So dean knew that once his parents died it was just a matter of time before they’d have to sell? And in getting into all that debt with the move, is it going to ultimately pay off in terms of how much extra money they will have made from the sale?

The NFL has repeatedly claimed that they didn’t actually want the chargers move but I’m sure the other owners didn’t mind getting all that relocation cash…plus now the franchise is worth more than it was in san diego so how can that be bad for the owners? Don’t they get another infusion of cash from the sale?

I don't think Dean's intention was to sell the team after the parents died. They hoped to get a taxpayer assisted stadium and when that failed, they jumped on the SoFi deal knowing the team would appreciate in value and then sell a portion of the team (The Chargers Trust 36% = ~$1 billion) or cash out 100%. The Spanos family would still retain a majority 60% interest in that scenario.

When a trust is insolvent the managers (Trustee and Co-trustee) have a legal duty to act hence the lawsuit. Deans refusal to address the insolvency or a viable plan at least are grounds for removal. The trust has legal obligations to pay 4% of its net profits (Per the trust) to charitable organizations and that is not being met. This is in the shadow of a new Chargers company jet whether bought or leased being used for haircuts as just one example of Trust mismanagement.

The Chargers have appreciated 33% in year over year or $100 million a month in appreciation with no signs of slowing down (see link below).

https://www.forbes.com/nfl-valuations/list/#tabverall (the link works - not sure how smiley face gets in link)

With that type of team value appreciation ($100 million per month), I can understand why Dean is not as concerned with the trust being upside down by $11 million per year.

There is no NFL fee to transfer a franchise to new ownership to my knowledge unless the new CBA has that new fee change. Expansion teams and relocation fees are the biggies for fees but not new ownership - yet. We would have heard about it in the Broncos sale if there were a fee for new ownership. The NFL owners should be happy the Broncos pushed the value bar UP for all NFL franchises.

[Trumpet Man]

The Chargers are worth around $4B. There are four siblings. Ass-u-me each has 25% share it will cost $1B to get that 25%. Not sure anyone
would pay $1B for a minority stake. I'm sure Dean will do everything in his power to keep the Chargers, but just not sure he'll be able to do that.
Anyways here's hoping.

If I told you to invest $1 billion today and in one year your investment is now worth $1.33 billion would you be happy as an investor ?

In Year 2 your investment is now worth $1.66 billion

In Year 3 = ~$ 2 billion

Does that sound like a good deal now ?

[Xenos]

Here’s the article breakdown talking about the situation when it originally happened in 2021. Popper was involved in writing it.

https://theathletic.com/2493803/2021/04/02/no-the-spanos-family-wont-be-forced-to-sell-the-chargers-to-jeff-bezos/

Dea Spanos Berberian, the sister of Los Angeles Chargers owner Dean Spanos, filed a petition in L.A. Superior Court on Thursday in a bid to force a sale of the team.

This, naturally, produced a flood of questions and hot-take reactions. But what exactly is going on here? Does Berberian have the leverage to force a sale? Will the petition hold weight in court? Why is Berberian, who herself effectively owns a quarter of the Chargers, trying to pressure a sale when the league just signed new television contracts worth over $100 billion, of which the Chargers will directly consume 1/32? Did Dean Spanos actually admit to wanting to sell the team in three years? Are the Chargers really swimming in mountains of debt?

We answer and explain.


The petition
The petition, first reported by the L.A. Times, specifically targets a 36 percent stake of the Chargers that is owned by a trust. Dean Spanos and Berberian are the sole co-trustees. Alex and Faye Spanos, the siblings’ parents, who died three years ago, created the trust in 1998. That was four years after Alex ceded control of the team over to Dean, who, through an operating agreement, is the “manager” of the team.

That 36 percent stake, which was previously owned by Alex and Faye, is effectively divided equally among the four children: Dean, Berberian, their brother Michael Spanos and their sister Alexis Spanos Ruhl: 9 percent each. Each also owns an additional 15 percent of the team individually, meaning each sibling’s stake effectively totals 24 percent. The Spanos family owns 96 percent of the Chargers. While the petition is brought on behalf of the trust, it seeks to compel a full sale of the team.

The filing alleges the trust is facing an estimated $353 million in debt — or “total liabilities” — and is taking on $11 million in additional debt annually. The estimated total figure includes more than $75 million in projected estate tax that is not finalized, as the IRS has not yet completed an audit of Alex and Faye Spanos’ estate following their deaths. The petition also alleges $22.5 million in outstanding pledges to charities that are included in the liabilities.

What is unclear from the petition is whether the $11 million loss represents a historic pattern. The petition says only that amount was lost in 2020, a pandemic year when NFL teams on average were short $125 million and paying players full salaries. The petition does not mention losses from previous years and predicts future losses that are predicated on the same amount of income as 2020.

This debt is the primary basis of the petition’s argument. “Rather than seeking to monetize illiquid assets in order to pay debts and liabilities, and make distributions to beneficiaries, the Co-Trustees have principally been borrowing, including borrowing money from one bank to pay another,” the petition reads, referencing the 33 beneficiaries of the trust, 28 of whom are grandchildren or great-grandchildren, and one of which is the Spanos Foundation. In other words, Dean, and by association his siblings, have been refinancing their debt. This is a relatively common practice and a typical NFL team would have hundreds of millions of dollars in debt, a conservative amount on such a valuable asset.

The petition argues that selling the 36 percent stake of the Chargers is the “only candidate for solving” the debt issues. It states the Chargers as an asset account for 83 percent of the trust. The implication is the lack of diversification in the trust leaves no other options for producing enough liquidity — or cash — to pay off the debt.

Dean, Michael and Alexis rejected this argument in a statement.

“Our parents, Alex and Faye, wanted the Chargers to be part of the Spanos Family for generations to come,” the statement read. “For the three of us the Chargers is one of our family’s most important legacies, just as it was for our parents. Unfortunately, our sister Dea seems to have a different and misguided personal agenda.”

The petition lists the liabilities the trust faces, but it does not discuss the assets the trust owns.

According to Forbes’ most recent valuation, the Chargers are worth $2.6 billion. They could be worth more than that on the open market, and one reason behind the lawsuit may be to attract buyers.


So what happens now?
A lengthy and arduous court battle between family members … unless the NFL steps in.

The important part of this legal fight comes down to the right of first refusal, which the petition addresses and explains. According to agreements, if one of the four siblings wants to sell any part of their share of the team, “any of the Spanos owners … have a right to match the proposed offer.” The absolute best-case scenario for Berberian is that the court rules in her favor and forces the other siblings to sell the 36 percent stake. At that point, though, the siblings will have a legal right to match any offer and regain control of the 36 percent. Berberian would get her liquidity. The Spanoses would maintain their 96 percent stake in the Chargers by effectively buying out her 9 percent stake in the trust.

According to a source close to the family, the Spanoses view this as a highly unlikely outcome and one that would not materialize for years. But even if it gets to that point, there is not an apparent scenario where Dean, Michael and Alexis would cede control of the team unless they want to. And, of course, Dea is not just asking the court to compel the sale of the 36 percent interest, but of the whole team.

“If Dea no longer wishes to be part of this family legacy, the three of us stand ready to purchase her share of the franchise, as our agreements give us the right to do,” the three siblings said in their statement. “In the meanwhile, the operations of the Chargers will be entirely unaffected by this matter, which relates only to the 36 percent share of the team that was owned by our parents. The three of us are entitled to three-fourths of that 36 percent share in any event, and under no circumstances will this situation impact control of the franchise. The three of us will remain firmly united as we seek to fulfill our parents’ wishes to make every decision in the best interests of the Los Angeles Chargers.”

One possibility is the NFL steps in and forces the dispute into arbitration. All owners agree as terms of their membership in the NFL to take their disputes to arbitration. The NFL forced the disagreement between Washington Football Team partners out of court using this argument, though in a trust case it can be tougher. Nonetheless, the NFL is surely displeased to see this squabble hit the courts and thus the media.


And what about the letter?
According to the aforementioned 1998 operating agreement that designated Dean as “manager” of the Chargers, which the petition cites, “no non-manager member can sell its interest without the Manager’s (i.e. Dean’s) written consent to transfer and to admit a substituted member.”

To circumvent this stipulation, the petition includes a 2019 letter sent from Dean to his three siblings, two years after the team’s move from San Diego to Los Angeles. In that letter, Dean writes:

“Although there can be no assurance that a sale will actually be consummated, no later than thirty (30) days following the conclusion of our fifth (5th) season in the new SoFi stadium, I agree, in my capacity as Manager and on behalf of the Company, to retain an investment banking firm reasonably acceptable to Dea, Michael and Alexis to market the sale of the Company, and I will cooperate in such marketing effort in order to maximize value for the benefit of all Members. I shall commence the process to interview and identify qualified investment banking firms to present to Dea, Michael and Alexis reasonably in advance of the retention and arrange for meetings among the parties as part of the engagement process. In the event that any Member wishes to sell his or her interest in the Company as a result of the above referenced process or at any other time, I hereby provide my advance consent to such transaction subject to the rules of the NFL regarding such sales and the first refusal rights referred to … above.”

This section of the letter will surely be heavily debated in court. The petition argues that this paragraph from Dean qualifies as “written consent to transfer” after the 2024 season, which would be the Chargers’ fifth in SoFi Stadium. Dean, Michael, Alexis and their lawyers will argue that this paragraph dictates no such thing. From their perspective, Dean was merely creating a pathway for Berberian to get out of the family business and gain liquidity for her stake in the team, and that nowhere in the letter did he commit to sell. Hiring an investment banking firm, as Dean writes, would be necessary to acquire a firm valuation of the Chargers. This, in turn, would allow Berberian to sell her 9 percent stake at market value.

The petition, meanwhile, argues that liquifying the 36 percent is a means to get out from under the $353 million in debt.

If the court accepts that this letter is proof of written consent, it could force the sale of the 36 percent. But, again, the three remaining siblings have the right of first refusal and can regain the entirety of the trust’s stake even if they lose the court battle.


The bottom line
In the end, we do not know Berberian’s true intentions. The petition leans into the widely circulated narrative of the cash-strapped Chargers. The facts, on the other hand, paint a picture of someone seeking liquidity at the earliest possible date.

From a legal standpoint, Berberian has an avenue to gain that liquidity. But because of the right of first refusal, the prospect of her forcing her siblings to sell the team to a third-party buyer, like Amazon founder Jeff Bezos, just does not have legs.

The three siblings — primarily Dean — could eventually decide to sell the team. Sports owners many times before have misled in written statements. But if they do sell, it would happen on their own terms.

[ghost]

One possibility is the NFL steps in and forces the dispute into arbitration. - LATimes

It has gone into arbitration and NFL guidelines are to not comment publicly on any on-going litigation. So there we are.

Arbitration. Pretty effective gag order for NFL owners.


This section of the letter will surely be heavily debated in court. You can bet your ass on that.

[Trumpet Man]

Holy roller wasnt an elimination playoff game. Team wasnt ready that year to take over the world - wasnt that Tommy Protho’s last year? Thats a key reason for lifetime hate of the Raiders but not worthy of the epic loss list our estimated brother offered. I’ll grant ice bowl entry.

ironically - I’m resolved with all of them - even “The Jax Jinx”. Onward … fuck it. Pain is something you push thru.

Yeah Prothro's last year was '78 when he quit right after the holy roller game. The same day the Chargers announced Don Coryell as the new head coach got buried in the news that day. PSA Flight 182 collided with another small commuter plane and crashed into North Park San Diego killing all aboard. Don Coryell was the head coach at one of my alma maters - SDSU.

I reason I added the Holy Roller was not due to a genesis of hate for the Raiders but a seismic shift the way the fan base viewed the AFL vs. NFL.

Younger fans may not realize the old AFL'ers rooted for the AFL to kick the shit out of the NFL in the first few Super Bowls. The AFL was seen as the inferior league treated like semi-professionals - bastard step kids. The Holy Roller game threw all of that AFL loyalty shit right out of the window and Fuck the Raiders / Chiefs / Broncos / Seahawks was born. Ok Fuck the Raiders harder than the rest (sorry BDH).

Anyway, I was surprised no one posted the lawsuit and Spanos Trust to be digested like raw meat by the forum. The trust appears to have grounds for the charitable organization(s) to file litigation against the Spano trust and why I suspect sister Dea was pushing Dean to disclose a Trust insolvency mitigation plan for all to see and sign off on. Dean is in breach of his fiduciary responsibilities as Co-Trustee the way I see it.

[Air Coryell]

[QUOTE=Trumpet Man;n1462986]

Yeah Prothro's last year was '78 when he quit right after the holy roller game.

He quit after the Green Bay game (#4). Temp was like 103 at the Green Bay game; hotest game I've ever been to in San Diego. Don came in for the next game

[Trumpet Man]

[QUOTE=Air Coryell;n1462994]

Yeah Prothro's last year was '78 when he quit right after the holy roller game.

He quit after the Green Bay game (#4). Temp was like 103 at the Green Bay game; hotest game I've ever been to in San Diego. Don came in for the next game

More importantly 1978 was Year 3 as Trumpet Man

:larry:

[Trumpet Man]

Here’s the article breakdown talking about the situation when it originally happened in 2021. Popper was involved in writing it.

https://theathletic.com/2493803/2021...to-jeff-bezos/

Good read but Popper is blowing it in a few areas IMHO. Namely how a trust operates and the trust debt coming due and a likely IRS audit putting further strain on estate taxes and the trust.

This is why I read the lawsuit for myself and the Spanos trust.The lawsuit lays out debt obligations due in 2021, 2022, 2024. This link is 156 pages long.

https://www.scribd.com/document/5012...rian-Petition#

There is no prospect that the Trust will have improved cash flow in the future or anywhere near what would be needed to juggle its debts. It is likely the IRS will audit the estate tax returns. If the audit results in a greater estate tax, the Trust’s unsustainable debt becomes only worse.

In addition, long term debt held by third party banks matures shortly in the amounts of $5,773,000 in fiscal year 2021, and $24,400,000 in fiscal year 2022. Similarly, while they currently pay interest on estate taxes owed, the Co-Trustees This amount consists primarily of interest receipts from promissory notes due from the Siblings with payment due in full on June 30, 2027. will need to make principal payments of about $7.8 million per year beginning in fiscal year 2024. Maintaining the status quo is not an option.

[Trumpet Man]

The bottom line
In the end, we do not know Berberian’s true intentions.

This one phrase above Popper wrote stood out to me biggly big. After reading the lawsuit and the Spanos trust sister Dea's intentions are 100% crystal clear.

Dea is doing her job as Co-trustee otherwise she is just as complicit as Dean for the trust's insolvency. That opens up the Trustees for litigation by the beneficiaries. Dea is covering her ass and that of the trust and beneficiaries

From a legal standpoint, Berberian has an avenue to gain that liquidity. But because of the right of first refusal, the prospect of her forcing her siblings to sell the team to a third-party buyer, like Amazon founder Jeff Bezos, just does not have legs.

This quote above understands Dea has legal leverage but falls short.

If Dea gains control of the trust (36%) she can sell that portion to satisfy trust debts and obligations.

If Dea adds her 15% to the trust sale now 51% of the team could be bought by a Jeff Bezos or the legs Popper says are missing.

Popper misses the trust math here - and - the fact the Chargers would need "another" waiver because the teams debt limit has been reached ($600 million) for a sibling right-of-first-refusal buyout of ~$1 billion. MY survey says the NFL is not likely to extend another mortgage to the Spanos clan for a "buyout waiver" and would rather juice the NFL club with more power players like Bezos.

[Trumpet Man]

One possibility is the NFL steps in and forces the dispute into arbitration. - LATimes

It has gone into arbitration and NFL guidelines are to not comment publicly on any on-going litigation. So there we are.

Arbitration. Pretty effective gag order for NFL owners.


This section of the letter will surely be heavily debated in court. You can bet your ass on that.

I call it a "Letter of Intent" and that carries legal weight. I am no trust lawyer but that would be my guess especially when addressing the trust's insolvency. Any delays could be viewed as tortious interference (I think ?) and then more legal hell breaks loose. A good contract attorney could answer this question.

[charger1_sj]

If I told you to invest $1 billion today and in one year your investment is now worth $1.33 billion would you be happy as an investor ?

In Year 2 your investment is now worth $1.66 billion

In Year 3 = ~$ 2 billion

Does that sound like a good deal now ?

Sure if I'm able to sell. There are as you know lots of restrictions in the NFL when it comes to team ownership. In addition if it was
me I'd want some say in how the team is run. Not sure one would get that with Spanos in charge.

But lets say you don't sell. In terms of cash what am I getting for my $1B investment? At 5% (a reasonable attainable number) my
$1B would net me $50M/year. Are you going to get that from the Chargers? I don't think so.