Dean Spanos didn’t promise to sell the Chargers after the 2024 season

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The article in the Los Angeles Times regarding the sudden and unexpected dysfunction within Chargers ownership makes a claim that has gained significant traction. That claim, however, is not factually accurate.

The claim is this: Dean Spanos has promised to hire an investment banker after the 2024 season to find a buyer for the team. This contention has been characterized as a broader intention to sell the team.

First, the trust at the center of the litigation holds only 36 percent of the franchise. The remaining 64 percent has no direct connection to the lawsuit. (There’s an important indirect connection, however. Keep reading and it will eventually make sense.)

The commitment to hire an investment banker relates to the identification of potential opportunities for the various members of the Spanos family sell their shares (nine percent each for four siblings) held in trust. A decision by any member of the Spanos family to sell the portion held in trust would be subject to a right of first refusal, and it would give the remaining family members the ability to buy out the others at the price offered by a prospective external buyer.

As a source with knowledge of the situation explained it to PFT, Dea Spanos Berberian has wanted to sell her share of the team since its relocation to L.A. The 2019 letter in which Dean Spanos refers to the future hiring of an investment banker flows directly from Dea Spanos Berberian’s desire to sell. The letter does not contain any agreement that the team will be sold.

Here’s the key language from the letter, which was attached as Exhibit 3 to the petition filed by Berberian: “Although there can be no assurance that a sale will actually be consummated, no later than thirty (30) days following the conclusion of our fifth (5th) season in the new SOFI stadium, I agree, in my capacity as Manager and on behalf of the Company, to retain an investment banking firm reasonably acceptable to Dea, Michael and Alexis to market the sale of the Company, and I will cooperate in such marketing effort in order to maximize value for the benefit of all Members. I shall commence the process to interview and identify qualified investment banking firms to present to Dea, Michael and Alexis reasonably in advance of the retention and arrange for meetings among the parties as part of the engagement process. In the event that any Member wishes to sell his or her interest in the Company as a result of the above referenced process or at any other time, I hereby provide my advance consent to such transaction subject to the rules of the NFL regarding such sales and the first refusal rights referred to in E. above.”

In English, this means that Dean Spanos will retain an investment banker after 2024 to locate a potential buyer for the 36-percent of the team held in trust for the four Spanos family members. If/when one of those family members has a buyer for his or her share, the remaining family members will have a right to match that portion of offer. If they don’t, the family member who wants to sell his or her interests will be able to do so.

Of course, it’s possible that someone like Jeff Bezos will make one or more offer(s) to family members that individually can’t be refused and collectively can’t be matched. There’s still no blanket commitment to sell the 36-percent interest in the team after 2024, or at any point.

Berberian, through her lawsuit, wants to force a sale of the entire interest in the Chargers’ organization (36 percent) owned by the trust through which she and her siblings each hold nine percent of the team. She wants to do that for one very simple reason, in our view. She knows she’d get more for her nine-percent interest in the team if it’s sold as part of a 36-percent chunk than she’d get if, in the end, a buyer attempts to acquire only her nine-percent interest via the trust.

She’d get more because, coupled with the separate 15-percent interest that she and her three siblings each separately own in the team, a forced sale of the full 36-percent share held by the trust would allow an outside buyer to add that to Berberian’s 15-percent share. That’s 51-percent of the team and full control of it.

This reality makes Berberian’s 24-percent interest in the team FAR more valuable than the nine percent she can sell through the trust and the 15-percent she can sell on her own.

By forcing a sale of the 36-percent and packaging it with her 15-percent share, Dea Spanos Berberian can hand Bezos or someone else the ability to take over the team — and that’s the kind of thing that infuses far greater value into any and all available equity interests.

26 responses to “Dean Spanos didn’t promise to sell the Chargers after the 2024 season

  1. I wish I understood more about finance, but I’m still unclear — does her desire to get more create a situation where the team would be sold sooner than later?

    Could this be an organized plan to force a sale early, thereby attracting a buyer now?

  2. I would never even consider buying a portion of a franchise that Dean Spanos has controlling interest in.

  3. The move from SD to LA is so bad that the team is not going to make much money, because the stadium is unlikely to be filled even without the pandemic. That means having a 9% ownership interest in the team won’t translate much as income. Selling would be the wisest thing to do fir the siblings. I seriously doubt that Dean Spanos would be able to come up with the financing to buy out his siblings. None of them appears to be optiimistic about the team’s future in LA.

  4. The other members of the Spanos family won’t sell the team for all the money in the world. They already have all the money they need, but owning and NFL franchise is priceless. They get more joy from the football team than they would sitting around counting stacks of money. The other NFL owners might not want someone like Bezos coming in and throwing things completely out of whack. That could be the beginning of the end. The USFL might still be around if it weren’t for the owner of the New Jersey Generals.

  5. Let’s be honest – it’s been known in league circles for years that the main driver in Dean moving the team to Los Angeles was to get the spike in value, vs SD.

    It’s been his intention all along to sell the Chargers.

  6. californianewton says: “The move from SD to LA is so bad that the team is not going to make much money, because the stadium is unlikely to be filled even without the pandemic.”
    ———————-

    And you’re wrong.

    According to Forbes, the Chargers have shot up in value from $995m from when they announced relocation plans in 2015 to $2.6 billion as of Sept 2020.

    Even if 50% of San Diego population is still smaller than just 10% of Los Angeles.

  7. Kinda makes sense that Amazon owns a NFL team, monopoly means control and no better way to get some control than owning a team. Follow that up with some broadcast rights so the eaters can sit, watch and buy simultaneously.

  8. I doubt Bezos will try to buy it. Amazon wants Sunday Ticket, Amazon has AWS so they can stream ST seamlessly. Bezos being an owner doesn’t make sense unless the NFL is interested in hosting the ST package themselves through Amazon. Otherwise it’s a conflict of interest owners aren’t going to want to be in place.

  9. What’s clear is the fact that Bezos has wanted to purchase an NFL team for years, and he has been very vocal about that fact. His newspaper was leading the charge surrounding the scandals involving the Washington football team including the name change, and his hope was that Dan Snyder would eventually concede, and agree to sell, but that didn’t happen. Now suddenly here’s his name being mentioned in a new “situation” involving another franchise. It’s all a little suspect to say the least

  10. There is no “sudden and unexpected dysfunction” with Chargers ownership. It’s been present and obvious for decades.

  11. chefboyd says:
    April 2, 2021 at 12:14 pm
    californianewton says: “The move from SD to LA is so bad that the team is not going to make much money, because the stadium is unlikely to be filled even without the pandemic.”
    ———————-

    And you’re wrong.

    According to Forbes, the Chargers have shot up in value from $995m from when they announced relocation plans in 2015 to $2.6 billion as of Sept 2020.

    Even if 50% of San Diego population is still smaller than just 10% of Los Angeles.
    ———————————————————-
    You’re very wrong on the facts and the math. LA is the second largest city in the US with 4 mil, San Diego the 8th with 1.4 mil. It’s not like Spanos moved from Biloxi Mississippi. In LA, the Chargers become the 5th most popular football team behind the Raiders, the Rams, USC, and UCLA. The idea that it became more valuable in LA is ludicrous. They have a horrible lease and won’t sell tickets. Without a favorable lease and guaranteed ticket sales, there is no value.

  12. Have you ever met a Charger fan? Me either. Think about it……

  13. Isn’t there some fat cat in San Diego with enough cash to buy out this disaster of a franchise, and return it to San Diego where it belongs? Somebody gotta step up.

  14. It was common sense when they moved to LA they’d be lost amongst so many other pro teams. In fact, they are last on the list. Move to a soccer stadium which they could not even fill, pay the relocation fees, and no fan base, well duh, did you not think you’d leak money like a sieve? And to cap it off they are second rate renters in the House that Kroenke built and opened up to exactly no fans even though we all know the fans there were rooting for the other team! Spanos family has long been poor guardians of the franchise but they get what they deserve upon the move to LA. Not going so well is it, but the millions of people down in SD could have told them that all along.

  15. You’re very wrong on the facts and the math. LA is the second largest city in the US with 4 mil, San Diego the 8th with 1.4 mil. It’s not like Spanos moved from Biloxi Mississippi. In LA, the Chargers become the 5th most popular football team behind the Raiders, the Rams, USC, and UCLA. The idea that it became more valuable in LA is ludicrous. They have a horrible lease and won’t sell tickets. Without a favorable lease and guaranteed ticket sales, there is no value.
    ————————————————————————————–
    You’re looking at the population of the CITIES. The populations of the METROPOLIAN AREAS (the cities near Los Angeles and San Diego) tell a very different story.
    The Metro Area of San Diego is 3,338,000, making it the 17th largest metro area in the county.
    The Metro Area of Los Angeles is 13,214,800, making it the 2nd largest metro area in the country (behind only New York).
    There really is no comparison, population-wise, between the two cities.

  16. “The idea that it became more valuable in LA is ludicrous. They have a horrible lease and won’t sell tickets. Without a favorable lease and guaranteed ticket sales, there is no value.”

    The Forbes documented increase in value following the move to Los Angeles disagrees with you. And claiming that the franchise has no value is simply ludicrous.

  17. The reality is it was stupid to relocate two teams to LA and the lesser team was always going to hurt (think Giants vs Jets).

    Chargers took a huge step backwards.

  18. The whining and crying about San Diego losing the Chargers became tiresome long ago. The San Diego voters had multiple chances to approve upgrades to the existing stadium or build a new one. Each time the voters rejected those proposals. Thus, the citizens of San Diego clearly stated that they did not care if the Chargers remained.

  19. I’ve often heard the old joke in Southern California, charger fans are a lot like a UFO, there have been many sightings, but their existence hasn’t been confirmed.

  20. As a charger fan, I can confirm only 100 of us exist. Once they left San Diego, it was over.. everyone knew LA was Raider and now Ram country. In typical so-cal fashion, whoever is winning most will get the attention, otherwise, they become “uncool”.
    The best for a team (not financial value) was to move to a completely new location.

  21. The Chargers were always going to be in a no win situation in LA. However, there is a dark horse city in all of this…No one is paying attention but the city of St. Louis is turning the screws on the NFL and Stan Kroneke in the lawsuit against the Rams an the NFL. And before you start laughing do a little research. Kroenke and the NFL have lost every judgment trying to keep this lawsuit out of the public courts and have lost at every turn. Then the supreme court refused to hear Kroenke’s pleas to send this to arbitration. There were rumors certain owners were trying to talk Spanos to moving the team to St. Louis and he said no. Well, now the NFL is in a pickle. The city of St. Louis now knowing this law suit is headed to trial next year wants to depose Goodell, Kroenke and every other NFL owner, which means the NFL would have to open its books which it IS NOT going to do under any circumstances. This is about get very interesting. The NFL wants St. Louis to go away and it won’t and it appears their case has real teeth to it. St. Louis Chargers could be a reality in the 10 years. Or an expansion franchise.

  22. evildave says:
    April 2, 2021 at 1:02 pm

    The idea that it became more valuable in LA is ludicrous. They have a horrible lease and won’t sell tickets.

    ———————==========———–

    Of course the Chargers became more valuable when they came to L.A.
    They went up in value as soon as they put “Los Angeles” in front of their name.
    Why do you think the Angels baseball team wants to call itself the “Los Angeles Angels”?
    You think if the Clippers owner moved them to Seattle they wouldn’t drop in value immediately?
    It doesn’t matter about the lease or how many tickets they sell. The Chargers franchise is worth more in Los Angeles than it ever was in San Diego. All their marketing, media & advertising went up in value just for being in Los Angeles.

  23. Why wouldn’t Bezos just buy the Seahawks from Jody Allen? That’s his team. Unless he buys the Chargers and moves them back to San Diego. Then he’d be a hero to Lo Cal.

  24. “The other members of the Spanos family won’t sell the team for all the money in the world. They already have all the money they need”
    ___________

    Collectively they have the money their father did which was on the lower end in the fabulously wealthy world of NFL owners. Individually each has 1/3 that amount meaning it’s very unlikely any one of them could buy out the other two. It’s highly likely they’re going to sell at some point and the trust setup seems to suggest the father anticipated that because that arrangement is not one you would make if your goal was your heirs continuing ownership long-term. It basically invites a sale.

  25. The Chargers are just not a product that anyone in LA wants to watch. They alienated a fan base of 56 years to go to a city where they weren’t wanted. The Raiders have sold more PSL’s in the greater Los Angeles area than the Chargers have. The Raiders were actually the team that most LA Football fans wanted.

    I noticed that no one has commented on the cash flow problems that the Chargers have…they aren’t paying down their debt….they are borrowing from one bank to pay off another….essentially transferring it, rather than paying it off. Some folks have pointed out that the value of the franchise has risen since the move, but that money can’t be realized unless it is SOLD.

    As much as I wish that the NFL would go Donald Sterling on Dean’s ass and sell it to someone who would move them to San Diego, where would they play? I can’t see anyone buying them and announcing they would move them back to San Diego, and taking 2-3-4 years to build a stadium.

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