CA Inc. co-founder Charles Wang was sued by investors over claims he reneged on a deal to sell them the New York Islanders hockey team for $420 million, a year before the team is set to move into the $1 billion Barclays Center in Brooklyn.
The investors, a group called NY Ice LLC led by attorney Andrew Barroway, said in the lawsuit that they want a New York state judge to order Wang to sell them the National Hockey League franchise or, in the alternative, pay a $10 million breakup fee.
Wang agreed in March to sell the team to the group for $420 million, including $100 million in cash, according to the complaint filed yesterday in Manhattan
Wang then “blindsided” Barroway at a meeting four months later, where he demanded $548 million for the team, citing the agreement to sell the National Basketball Association’s Los Angeles Clippers to former Microsoft Corp. Chief Executive Officer Steve Ballmer for $2 billion, according to the suit.
On Aug. 1, Wang told Barroway that he had decided to sell the team to a different, unnamed investment group, according to the complaint. The deal would have been completed had the NHL not sought “mechanical changes” in the way the financing was structured that didn’t change the material terms of the agreement, according to the suit.
“Wang was having seller’s remorse because he believed he had agreed to sell the Islanders for a price too low after hearing the unrelated news that a $2 billion bid was placed to purchase the Los Angeles Clippers of the National Basketball Association,” according to the suit.
The Islanders said in a statement that there is “no merit” to the claims in the lawsuit.
Mark S. Kingsley, an attorney with Kaye Scholer LLP who represented Wang in the sale negotiations, didn’t immediately respond to voice-mail and e-mail messages seeking comment on the suit.
The team is scheduled to move into the Barclays Center, the home of the Brooklyn Nets, next year. Russian billionaire Mikhail Prokhorov owns the Nets and a share of the arena, which opened in 2012.
A software entrepreneur from China, Wang bought a share of the Islanders in 2000 and assumed principal ownership in 2004. He signed the 25-year lease with the Barclays Center after trying to secure a new arena for the Islanders on the site of Nassau Veterans Memorial Coliseum in Uniondale, New York, the team’s home since 1972.
The Islanders’ relocation was announced in October 2012 after Wang lobbied unsuccessfully to build a new arena on Long Island.
As part of that announcement, Wang said that he would remain the sole owner of the franchise. Earlier this year, after media outlets such as ESPN and the New York Post reported that Wang and Barroway were discussing a sale of the team, Wang said in a statement that entertaining offers didn’t mean a deal would be reached.
While the team won four consecutive Stanley Cup titles from 1980 to 1983, it hasn’t won a playoff series since 1993. New York has missed the playoffs in six of the past seven seasons and finished in the bottom quarter of the league’s attendance every year since 2003-04.
The team is worth $195 million, according to Forbes Magazine’s annual valuations. That’s 26th in the 30-team NHL, and less than half the league average of $413 million.
The case is NY Ice LLC v. Wang, 652450/2014, New York State Supreme Court, New York County (Manhattan).