Ownership of the Chargers at issue among the four siblings of the Spanos family
A recent online story has brought to light the latest developments in the dispute involving the ownership of the National Football League’s Los Angeles Chargers.
According to the story, the Chargers may be worth up to $3 billion. The Spanos family collectively owns 96% of the team. The parents, Faye and Alex Spanos established a trust that owns 36% of the team. Their four children, Dean, Dea, Alexis, and Michael each own 15%. The parents passed away in 2018 and Dea and Dean now run the trust. Further details with respect to the trust remain unclear.
Dea has recently filed a petition in Los Angeles Superior Court seeking the sale of the team.
The petition filed by Dea alleges that the trust has debts and expenses that exceed $353 million and that these are going to continue to grow by $11 million annually. The petition also alleges that the annual shortfall has been made up so far by borrowing more money from financial institutions. Apparently, Dea lacks sufficient control to unilaterally force the sale of the team so she has made the dispute public.
If the team is worth $3 billion, then the trust’s interest is worth more than $1 billion. This is far greater than the alleged debts and expenses.
Dea has alleged that Dean has refused to consider a sale of the trust’s interest. Dean has insisted that the team ought to continue borrowing to address the trust’s financial situation.
Dean, Alexis, and Michael have taken the position that their parents intended for the team to be part of the Spanos family for future generations. The three siblings have released a statement in which they have made it clear that they were prepared to purchase Dea’s share of the team. They have also asserted that each of the four siblings is entitled to a quarter of the interest the trust has in the team.
Dea’s total interest would be 24% (15% of her own share and 9% based on her interest in the trust). The remaining siblings would have 72% (45% of their own shares and 27% based on their interest in the trust). The remaining 4% interest is held outside of the Spanos family.
The three siblings have also stated that the current situation will not impact the control of the team.
None these allegations have been proven in Court.
Dispute may create uncertainty with respect to the future of the Chargers
The parties involved in this dispute have significant resources for a prolonged legal battle. It is unclear what impact the ownership dispute may have on the team and its performance.
In previous team trust disputes or disagreements between partners, the National Football League has appointed an arbitrator. This process usually takes place instead of litigation, not in conjunction with it. It will be interesting to see if the NFL will attempt to get the parties to move the dispute to private arbitration. The parties may also want to consider mediation of their dispute.
The global pandemic may also impact the team as many sports leagues have stopped in-person attendance. This dispute shows that siblings fight regardless if there are a few hundred thousand or many millions of dollars at issue. Sibling disputes are often driven by emotion especially after the recent death of a parent.
This will be a very interesting story to follow.
More on this story here.