Not everything is bigger in Texas, but the legal drama building between current Houston Astros owner Jim Crane and former owner Drayton McLane over what Crane claims was a fraudulent business plan for Comcast SportsNet Houston could easily reached epic proportions.
On Thursday, Crane got the ball rolling when he officially filed a state court lawsuit against McLane, Comcast and NBC Universal that accuses McLane of breach of contract, and all three parties of fraud, negligent misrepresentation or omission and civil conspiracy. The lawsuit stems from Crane's purchase of the Astros in 2011, which carried a $615 million price tag and included a stake in the Houston Regional Sports Network, the parent company of CSN Houston.
On Friday, Crane addressed the lawsuit in greater detail in a press conference that actually aired on CSN Houston, saying he was misled about the true value of a regional television network that launched in 2012, and duped by McLane and Houston Rockets owner Leslie Alexander into buying interest an asset they knew was 'overpriced and broken.'
Crane purchased a 46 percent share in CSN Houston from McLane in a transaction that closed two years ago today, and he said business plan for the network, which is available to less than half of the Houston area’s 2.2 million households, has been “a bust.”
“These misrepresentations have caused us an enormous loss, and they’ve hurt our fans and hurt our city of Houston,” Crane said. “Because of these misrepresentations, we are stuck in a network deal that cannot get off the ground.
“So we now face a situation where we accept millions of dollars of loss each year with damage to the franchise and the city, or we fight back.”
The slow growth of the network has been attributed to many factors, including complicated subscriber rates and other broadcast fees. Crane claims the team has lost 'tens of millions of dollars and “perhaps hundreds” of millions' as a result of the network's failure, and would like to recoup his losses on the grounds of multiple breaches from the original purchase agreement.
In September, four affiliates of Comcast filed an involuntary bankruptcy petition on behalf of CSN Houston. The petition came about after the Astros had indicated the team likely would end its agreement with the network. Crane and his counsel will also seek to have that petition dismissed.
The entire situation is every bit as complicated as it might sound. Thankfully, we have the Houston Chronicle piece to sort out many of the details, including the effect this will have on the Astros offseason plans. David Coleman of the Crawfish Boxes also provided a bullet point breakdown of the legal matters involved that offer some degree of clarity. You're encouraged to check those out before forming a concrete opinion on the matter.
Of course, there's likely to be even more information released as the legal proceedings move forward. We'll keep an eye on those as well, but be prepared for a long, drawn out affair deep in the heart of Texas.
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