Astros/Crane lawsuit: Notes from Friday's press conference

Bob Levey

Jim Crane laid out his reasons for filing a lawsuit Thursday in state court against Drayton McLane.

On Friday, Astros owner Jim Crane clarified some points from the ongoing legal troubles plaguing Houston's regional sports network CSN Houston. In a 20-minute press conference covered the club's financial future, his issues with the McLane group's business model and more.

Before we get into the boring legal points of why he's doing this, here's a point right up front. Crane was asked twice about the Astros free agent budget and both times, Crane said it would not be affected by these troubles. He said the club has set aside money for Jeff Luhnow in 2014 and that it will not be affected by any of this.

That may not assuage those of you who are convinced Crane will not spend money on this team, but he also made the point multiple times that his ownership group did not buy this club with the idea that the Astros would be a low-payroll club.

Onto the notes:

  • Crane said this has been gestating for a long time. "We had a meeting in December 2012 in New York with all three parties to discuss the deal. One of Comcast's representatives turned to Leslie (Alexander) and said, 'I told you those numbers wouldn't work.'"
  • That moment suggests that it was not discovery of evidence in the ongoing bankruptcy dispute that led to this lawsuit and had been coming for a long while.
  • Crane's main complaint is that Comcast, McLane and Alexander entered into an agreement that artificially inflated the price of the network by setting rights fees into the business model that were unsustainable. That's the basis for the fraud, as the three agreed to those numbers based on Comcast getting a share of the network for himself.
  • Crane's response to the Comcast statement from earlier today: "Comcast is a $60 billion company and this is a $150 million company. They can't fix that if they want?"
  • The deal named Drayton McLane's company solely, but that was just because the statute of limitations was running out, dating back to the initial sale of the club. They reserve the right to add Alexander at a later date, if necessary.
  • Comcast only brought the Astros one deal they could have agreed upon for carriage. Crane said that deal would have lost the network $200 million over 10 years and that the network needs $150 million to function every year, including rights fees, trucks and on-air talent. I'm sure Leila Rahimi gets most of that.
  • Crane admitted that he is to blame for the problems to this point, but that they were not given the actual business plan for CSN Houston prior to purchase, that Drayton would only let them look at it during meetings. Also, he said that the deal looked to be in line with many other RSN deals, but was heavily front-loaded.
  • David Barron asked both Giles Kibbe, general council for the Astros, and Crane what the damages they were seeking amounted to. They declined to list specifics, but Crane did say it was more like "tens of millions, probably hundreds of millions."
  • MLB is in the loop here and was supportive of his decision to bring the lawsuit against Drayton.

Phew. That's a lot to take in. Any reactions from our legal/economic minds? If the three parties agreed to a deal with rates they knew were not attainable, could Crane take this case? How hard would that be to prove?

Audio of the press conference:

[Direct Download]

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