Nov. 23 (Bloomberg) -- The owner of Major League Baseball’s Houston Astros sued former owner Drayton McLane Jr. and Comcast Corp., claiming he was misled about the value of the regional sports network that televises the team’s games.
Houston Baseball Partners LLC, led by Jim Crane, filed the lawsuit Nov. 21 in state court in Houston. The company said it paid $615 million for the team and its 40 percent stake in Houston Regional Sports Network LP in November 2011 “based on knowing misrepresentations” McLane gave him concerning the network’s value.
“The former owner of the Houston Astros Major League Baseball team made hundreds of millions of dollars, and his media business partner stands to benefit by a similar amount, by selling an asset they knew at the time to be overpriced and broken,” Houston Baseball Partners said in the filing.
Subscription prices for the network were “falsely inflated” and subsequently rejected by major cable and satellite TV distributors, according to the complaint. The network is operated by NBCUniversal, a unit of Comcast, which are both named as defendants with McLane. The suit alleges fraud, negligent misrepresentation and breach of contract.
McLane didn’t immediately respond to a call for comment on the lawsuit.
Creditors including affiliates of Philadelphia-based Comcast filed an involuntary Chapter 11 bankruptcy petition against the network on Sept. 27 “to avoid the destruction of the network’s substantial value,” according to court filings. The network is owned by Comcast, the Astros and the National Basketball Association’s Houston Rockets.
Comcast, the biggest U.S. cable operator, claimed it’s owed more than $100 million and the network hasn’t been paying its debts as they come due.
“Comcast/NBCUniversal vehemently rejects any claim of wrongdoing asserted by the Astros,” the company said in a statement. “It appears that Mr. Crane is suffering from an extreme case of buyer’s remorse, and aiming to blame the network’s challenges on anything but his own actions. Comcast/NBCUniversal looks forward to vindicating itself in this litigation and also remains committed to a reorganization of the network in bankruptcy court.”
In court papers filed Oct. 7, the ball club called the involuntary petition “a transparent attempt to acquire the network and gain control over the Astros’ most valuable asset, the media rights to televise their own Major League Baseball games.”
Astros fans are also suffering, according to the owner’s complaint, because the team is left with what it calls “an impossible choice: either accept the broken network as is, and deprive thousands of fans the ability to watch Houston Astros games on their televisions, or distribute the games at market rates and take massive losses out of the Houston Astros player payroll -- thereby dooming the franchise for years to come.”
The Astros finished last in the American League’s Western Division this year, with 51 wins and 111 losses, the worst record in Major League Baseball.
The case is Houston Baseball Partners LLC v. McLane Champions LLC, 2013-70769, 80th Judicial District of Harris County, Texas (Houston). The bankruptcy case is In re Houston Regional Sports Network LP, 13-bk-35998, U.S. Bankruptcy Court, Southern District of Texas (Houston).
To contact the reporter on this story: Michael Bathon in Wilmington, Delaware, at firstname.lastname@example.org