Friday, April 16, 1999
Limiteds sue, say Schott is wangling
Cousin's offer would cost extra $12M
BY JOHN ERARDI and GEOFF HOBSON
The Cincinnati Enquirer
![[lindner]](http://reds.enquirer.com/img/mugs/lindner.jpg)
Carl Lindner
|
![[schott]](http://reds.enquirer.com/img/mugs/schott.jpg)
Marge Schott
|
The dueling offers for Marge Schott's shares of the Reds spilled into court Thursday with a lawsuit against Mrs. Schott by Reds limited partners Carl Lindner, George Strike and Bill Reik.
The limited partners allege in their complaint the second of the two offers — the one from Steve Schott, Mrs. Schott's cousin — was a “contrived agreement' that would cost them an extra $12 million: almost $5 million up ront and $7 million later, to buy Mrs. Schott's remaining share whenever she might choose to sell it.
Attached to the complaint are the agreements Mrs. Schott had with her cousin and Cleveland attorney Larry Dolan, who made the first offer.
One of the perks in the Steve Schott agreement, but not in the Dolan agreement, is that Mrs. Schott could buy the naming rights for the Reds' proposed museum for $250,000 and name it the “Schott Hall of Fame/Museum.” Such a move would stamp Mrs. Schott's mark for years to come on the franchise the limiteds are trying to remove from her control. Reds officials have said they want a substantial, interactive museum as part of their club's new ballpark scheduled to open in 2003. The museum would celebrate the Reds' history as baseball's first pro franchise.
The companies of Mr. Lindner and Mr. Strike — Great American Insurance and American Laundry Machine, respectively — along with William Reik Jr. are the plaintiffs in the lawsuit filed in the Hamilton County Court of Common Pleas.
The defendant is Mrs. Schott, against whom they seek a temporary restraining order and preliminary injunction and equitable relief.
It's the first public airing of a dispute between Mrs. Schott and Mr. Lindner. The lawsuit comes less than a year after the two appeared together at a news conference announcing the agreement for a new Reds ballpark.
The difference in the extra $5 million upfront cost for the limited partners if they to match Steve Schott's offer is $2 million in purchase price and a 4 percent commission — $2.68 million — to Steve Schott. $250,000 goes to charity.
The difference in the $7 million extra down the road for the limited partners if they have to match Steve Schott's offer is if Mrs. Schott decides to sell her remaining share of the team, she would get $15 million instead of the $8 million that Mr. Dolan offered.
$65M offer matched
The three limiteds, who want to purchase the 5.5 shares Mrs. Schott is offering for sale, had first tried to accomplish it by matching the $65 million offer from Mr. Dolan.
But Mrs. Schott, acting upon the limiteds' initial letter to her, reached out to her cousin and authorized him to put together a group to purchase her shares. Typically, putting together a group to make a purchase would bring even more than a 4 percent commission.
A hearing between the parties on the preliminary injunction to keep Mrs. Schott from moving forward on the deal with her cousin is expected to come within the next few days.
Mrs. Schott declined to comment, as did Steve Schott. Frank Kelley, the former attorney general of Michigan who represents Mrs. Schott, said he was handed the lawsuit at 5:30 p.m. Thursday.
“It wasn't unexpected,” Mr. Kelley said. “It's a 55-page document and I haven't had time to study it. We won't have any comment until we analyze it in morning.”
The limiteds were able to quickly determine the validity of the Dolan offer by establishing through Major League Baseball and other sources that Mr. Dolan had the net worth to do the deal. But trying to determine the money behind Steve Schott's offer has been a more difficult undertaking. The members of Mr. Schott's group haven't yet wanted their names released.
Some of the names did come up Monday at a meeting between the limiteds and Mrs. Schott, however, but weren't released to the media.
Validity questioned
The limited partners characterize Mrs. Schott's agreement with her cousin as “legally invalid” because it violates the Dolan agreement's “no shop” provision.
The document says the seller agrees to not negotiate or bargain with or provide any non-public information to any other party until the deal is consummated, or Major League Baseball doesn't approve the Dolan family as owner,s or the limiteds exercise their right of first refusal.
The paper trail of correspondenceis laid out in the attachments to the lawsuit.
The limiteds characterize to Mrs. Schott on March 11 that Mr. Dolan's offer is not binding. On March 29, Mr. Lindner telephoned Mrs. Schott to her the limiteds were going to match the Dolan offer.
Mrs. Schott writes Mr. Dolan April 1 expressing her regret there was no deal; “I feel bad about this, as you are my kind of good people.”
Paul Dolan, Larry's son, writes back April 1 there is indeed a deal, and he didn't want to change anything in the Dolan agreement prior to the expiration of the 30-day period during which the partners could match. On April 2, Mrs. Schott writes to the limiteds April 2: “Based upon your letter of March 11, and subsequent verbal confirmation that the limited partners and their legal counsel have given me saying the Dolan offer does not constitute an offer to sell the partnership units ... I hereby strongly reject you exercising your right of first refusal in respect to the Dolan offer, as such offer does not exist.”
Reds Stories
Bengals want more for No. 3 pick
DRAFT PREVIEW: QUARTERBACKS
DRAFT PREVIEW: CORNERBACKS
NFL Draft Order
LeClair makes Hall
Miami stuck in Title IX quagmire
SPORTS ON TV-RADIO
Top marathoners fly right by
Deaf student on track
LaSalle's Feiglein fueled by new attitude
CINCINNATI HIGH SCHOOLS RESULTS
HOCKEY TONIGHT
Reds page
