The National Football League said “no” to New Orleans Saints owner Tom Benson's original proposal to remove team ownership from his estranged family's trust funds. This means he’ll have to try again with new financial terms.
The NFL won't let Benson personally guarantee promissory notes he offered in exchange for Saints shares held in trust funds created for his daughter and grandchildren. This was recently reported in The Times-Picayune article, “NFL rejects Tom Benson's ownership deal with estranged family's trusts.”
The 89-year-old Benson disowned his daughter and two grandchildren after a bitter fallout a few years ago. According to Benson, he intends to leave full ownership of the Saints to his wife Gayle and has been trying to revoke the trust funds' shares.
Benson sued in federal court after the trustees guarding the funds blocked his attempt to remove assets in exchange for 30-year promissory notes, including about $375 million for the team’s shares. The offer also includes an attempt to remove shares in the Pelicans, the NBA franchise he also owns. The trust funds allow for assets to be removed, but only in exchange for other assets of equal value.
Court filings show the NFL's finance rules won't allow Benson to use his personal wealth, which includes his controlling, voting stock in the Saints, to back the proposed promissory notes. With that arrangement, the trusts could try to seize Benson's personal assets—including the controlling stock—if he were to default on the notes.
The trustees, attorneys Robert Rosenthal and Mary Rowe, and Benson announced this summer that a tentative settlement was reached. The promissory notes in the exchange were contingent on NFL approval. In August, a U.S. District Judge scheduled a trial after settlement talks didn’t result in a final agreement.
Benson recently filed an amended lawsuit with a new offer of promissory notes based on a January 2015 value of the team. Rowe's attorneys responded, claiming that because the NFL rejected Benson's first offer, any new deal must be based on the current value of the teams, which would be higher.
Rowe has asked a judge for a hearing on the issue. Benson's attorney says his client has a right to change the notes offered in January 2015. A trial is scheduled for February 6.
Reference: The Times-Picayune (September 30, 2016) “NFL rejects Tom Benson's ownership deal with estranged family's trusts”