A company run by former Dallas Mavericks owner Ross Perot Jr. filed suit Monday against the club and Mark Cuban's company that holds majority ownership in it, alleging that it's insolvent or verging on insolvency.
In the 13-page petition filed in a state district court in Dallas, Hillwood Investment Properties III Ltd. asked that a judge place Dallas Basketball Ltd., the team's business management, in receivership and order an independent audit of its operations. Hillwood also is seeking actual and punitive damages.
The petition alleges team management lost $50 million last fiscal year. Hillwood also alleges that the club has lost $273 million since Cuban's Radical Mavericks Management LLC bought its majority stake in 2000 from Perot's company, which retains a minority stake and partnership in Dallas Basketball Ltd.
The lawsuit also alleges the Mavericks company has an interest-bearing debt of more than $200 million, a $289 million deficit and negative working capital of $75 million.
The petition acknowledged that Cuban "has led the Dallas Mavericks to success on the basketball court."
"However, this success has come at a great cost. (The club) has made a litany of questionable business, financial and personnel decisions through the years that have placed (the club) in the position of not being able, through its own revenues, to pay its debts as they become due," the petition stated.
That has forced the club "to rely heavily on borrowings" to meet ongoing financial obligations that it lacks the financial resources to repay, "putting its long-term viability in serious question," the petition alleges.
The petition complained that the Mavericks rich payroll has meant a $75 million in luxury tax payments to the NBA so far and a projected $26 million more through June 2013. Hillwood also alleges the Mavericks are on the hook for more than $300 million in deferred compensation payments.
Hillwood contends that as a part-owner of the Mavericks, the rich spending "has substantially diminished" the value of its investment. It also alleges Cuban has refused to meet with the team's limited partners to provide information on the Mavericks' operations.
In a statement issued Monday night, Cuban said he had "either personally guaranteed or provided funding" to finance team operations. "So (Perot) is saying I can't pay back the money to me.
"The real issue is that he wants me to run the team the way he did in the '90s," Cuban stated, referring to one of the team's leanest periods on the court.
"The biggest mistake I have made with the Mavs was keeping him as a partner," Cuban said of Perot. "The Mavs are just fine -- except for the time and money we will have to waste dealing with Perot."
Last summer, another Perot company, Hillwood Center Partners, sued Cuban, accusing him of wrongfully diverting millions of dollars from the NBA franchise's home arena to help make up for cash shortfalls incurred by the team. Cuban accused Perot at the time of "trying to find nickels in the sofa cushion" in an attempt to recapture losses stemming from the Victory project, a retail and office development surrounding the American Airlines Center