FOR IMMEDIATE RELEASE
NFL-11 3/19/98
Contact: Greg Aiello
(212) 450-2000
NFL RULES HEADRICK’S RIGHT-TO-MATCH
DOES NOT APPLY IN SALE OF VIKINGS TO CLANCY
Roger Headrick’s right to match the sale of the Minnesota Vikings does not apply in the proposed transaction involving Tom Clancy, but current Vikings owners may not retain any interest in the club as part of Clancy’s purchase, NFL Commissioner Paul Tagliabue ruled today.
In an 18-page opinion, Commissioner Tagliabue held that the right to match did not apply because there were no commitments for any current Vikings owner to be part of Clancy’s group, and because the selling partners had agreed to sell 100 percent of the club.
The Commissioner’s decision centered on a provision in the letter of intent between the selling partners and the Clancy group stating that the Clancy group would "invite a number of the Shareholders…to retain a portion or all of their respective shares in the Company…on terms and conditions" to be agreed upon. The Commissioner ruled that if current owners actually retained "a portion or all of their respective shares," the transaction would amount to a sale of partnership interests that would trigger Headrick’s right of first refusal.
However, documents revealed no binding agreement between the Clancy group and any of the current partners regarding any form of "retained interests," and the oral testimony was insufficient to establish that the proposed sale involves a transfer of partnership interests to which Headrick’s right of first refusal applies.
Commissioner Tagliabue’s ruling directly impacts on the following individuals:
The current ownership retains control of the Vikings until a sale to Tom Clancy or another group receives NFL approval.
Excerpts from Commissioner Tagliabue’s
Decision on Vikings Ownership Dispute:
"The Partnership’s decision to sell all of the stock in Vikings Ventures was unanimous and was confirmed on several occasions. When the partners decided to offer for sale all of the Partnership’s stock in Vikings Ventures, it was recognized and considered by the partners that some individual partners might want to remain owners of the Club following the sale. However, the sale process was not originally designed to facilitate partners doing so. For example, the June 1997 document entitled ‘Points to Consider’ stated that any partner wishing to remain involved with the Club after the sale would need to do so through a separate transaction – i.e., once the Club was sold, no partner would retain his ownership interest."
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"The Partnership Agreement plainly provides a right of first refusal applicable to all transfers of members’ interests in the Partnership. Section 6.3 of the Agreement states, in relevant part, that
‘If any Partner (the ‘Offeror’) proposes to sell, assign, or otherwise transfer all or any portion of his partnership interest (the ‘Offered Interest’), other than as permitted by Section 6.2,…Partners owning a majority of the Percentage Interests shall be entitled to cause the Partnership to purchase all, but not less than all, of the Offered Interest upon the terms and conditions specified… If the Partners determine not to have the Partnership purchase the [Offered] Interest,…the remaining Partners, individually, [may]…elect to purchase all, but not less than all, of the Offered Interest upon the terms and conditions specified….’
"Accordingly, the right of first refusal is triggered by a proposal to transfer a Partnership interest."
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"The Letter of Intent described the transaction as ‘the purchase of all of the outstanding capital stock and outstanding options, if any,’ of Vikings Ventures. The Letter of Intent also contains a provision under which current partners would have an opportunity to retain a portion of their interests in the Holding Company subject to terms and conditions to be identified by the Clancy group or to be mutually agreed at a later date. This provision, entitled ‘Retained Interests/Put-Call Option’ reads in relevant part as follows:
‘The Purchaser shall invite a number of the Shareholders (the ‘Retained Shareholders’) to retain a portion or all of their respective shares in the Company (the ‘Retained Shares’) on terms and conditions acceptable to the Purchaser and the Retained Shareholders.’
"Significantly, this provision does not constitute a proposal by any partner to transfer an interest in the Partnership, or obligate any of the Shareholders, i.e., the partners, to accept such an invitation; nor does any other provision of the Letter of Intent do so."
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"Accordingly, I direct as follows:
"(1) The sale to the Clancy group of all of the stock in Minnesota Vikings Ventures Inc. currently held by Minnesota Vikings Ventures LLP may proceed. Mr. Headrick’s claim that the right of first refusal applies to this transaction cannot be accepted.
"(2) Consistent with the unqualified representations made by the partners and their representatives, the transaction constitutes a sale by the Partnership of 100 percent of the stock of Vikings Ventures and must continue to be so structured. Specifically, no selling partner may retain any direct or indirect interest in the stock of the Holding Company or in the Club as part of the Clancy group’s purchase. Those partners may, if they wish, seek to reinvest in the Club in separate after-tax transactions once a sale is concluded so long as such investments do not involve the transfer or retention of Partnership interests.
"(3) Without limiting this ruling, I note specifically that the selling partners may not exchange their equity interests in the Partnership, or equity interests in Vikings Ventures, or any other entity holding Vikings Ventures that they may receive if the
partnership is dissolved, for new or continuing ownership interests in any Vikings entity; nor may they retain, following the closing of the Clancy group’s purchase transaction, any of their current equity interests in the Partnership or any equity interest in Vikings Ventures (or any other entity holding Vikings Ventures) that they may receive upon dissolution of the Partnership. If any partner were to do either of these, it would be inconsistent with the uncontradicted representations of the selling owners in this proceeding, which are the basis for a key finding on which this decision rests. If the transaction is ultimately restructured in a way that involves ‘retained interests,’ or in such other ways so as to involve the transfer of Partnership interests, Mr. Headrick will be entitled to assert his right of first refusal, the application of which I would evaluate at that time."
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