A pair of Suns minority shareholders – Kisco WC Sports and Kent Circle Investments – have sued the team in a Delaware Chancery Court, reports Michael McCann of Sportico. The minority owners say in their complaint that they’re “dissatisfied” with the way Suns Capital Group LLC (Mat Ishbia‘s group) has managed the team.
As McCann details, Kisco and Kent Circle claim they haven’t been allowed to view records and financial information that would help them understand how the franchise is being run and how much their shares are worth. They’re demanding a court order that would allow them to look into alleged “potential breaches of a limited liability company agreement, mismanagement of the team and conflicts of interest,” McCainn writes.
According to Gerald Bourguet of PHNX Sports, when Ishbia took over as the Suns’ controlling owner in 2023, he gave the team’s 16 limited partners the opportunity to sell their stakes in the team at the same $4 billion valuation that applied to his majority stake. Fourteen of the 16 partners took that buyout offer, with Kisco and Kent Circle representing the only two holdouts.
Kisco has since sought a buyout from Ishbia’s group; there are conflicting reports on whether Kent Circle has done the same. Bourguet’s report suggests both minority stakeholders have looked to be bought out, while McCann says Kent Circle hasn’t done so but has expressed “growing concerns” about management.
The price that Kisco and Kent Circle are demanding from Suns Capital Group LLC to buy them out is based on a valuation in excess of $6 billion, according to Bourguet. The complaint, per McCann, alleges that Ishbia’s LLC didn’t respond in good faith to Kisco’s efforts to divest its shares by June 1 and instead issued a capital call for June 2 with “no advance notice.” The per-unit valuation conveyed on that call was “strikingly low and bears no relationship to the actual value of the company which is worth billions,” according to the plaintiffs.
In a letter to Kisco and Kent Circle, Suns Capital Group LLC indicated it has no objections to the minority partners finding another buyer for their shares, per Bourguet. However, the majority ownership groups insists that the minority stakeholders have no right to demand Ishbia’s LLC be the one to buy them out at a significantly higher valuation than the 2023 price.
Kisco and Kent Circle, meanwhile, argue in their complaint that the majority ownership group has been putting pressure on and diluting the team’s minority owners, citing “mismanagement and lack of transparency.”
According to Bourguet, the plaintiffs suspect Ishbia’s group of entering into undisclosed side deals and also raised questions about the funding of a practice facility for the WNBA’s Phoenix Mercury. As McCann writes, the complaint states that facility was “seemingly paid for using” team funds but that the minority stakeholders were “provided virtually no information” about how it was funded or the process used to determine its funding.
Attorneys for Suns Capital Group LLC will have the opportunity to respond to the complaint, McCann notes.
Oh baby a soaking wet billionaires slap fight! 🍿
So the two minority owners are currently in the Find Out phase.
Basically the minority owners didn’t want to sell at the 4B mark and now that the Suns are worth 7B they want to sell at that price because they think the value will go down if the Suns tank for the next 5 years or so.