Friday, 5 September 2014

Questionable Conduct

Charles Wang's sale of the New York Islanders to Jon Ledecky and Scott Malkin caught a number of people by surprise, including the man who thought he was at the front of the bidding line for the Islanders, Andrew Barroway. I admit that I was taken aback at first, but then started warming up to the idea that a former NHL owner and a man with extensive real estate expertise in New York could get the Islanders back on-track in terms of winning Stanley Cups. What I wasn't expecting was more shady, backroom dealings by an Islanders owner who spoke about doing things the right way.

According to an exclusive Fortune story scribed by Dan Primack, not only did Wang have a deal to sell the Islanders to Ledecky and Malkin, but his negotiations with Barroway which he's being sued for weren't even the first set of negotiations in which he was entered! Wang had orchestrated three deals with three different partners with none of them knowing that any other groups were involved!

I'm not too sure about this as I never took the class, but it appears Mr. Wang may want to read up on business ethics.

According to Mr. Primack,
Apparently unbeknownst to Barroway, Fortune has learned that Wang also was negotiating to sell the team to a Boston-based investment firm called Peak Ridge Capital. Not beginning in March, but several months earlier.
That's pretty sleazy. You can't leverage one group's bid to improve another bid without informing both groups that there are other suitors. When Wang allegedly had an agreement with Peak Ridge on July 28, he turned around and used that bid to up the ante on Mr. Barroway! Sleazeball!

Look, I'm not a businessman. I understand that stuff like this could happen on a smaller level every day. There are questions as to why the NHL didn't step in or what the NHL knows, but the NHL has always maintained that they allow the owners to come to a deal to sell the franchise before the NHL does its due diligence on the prospective new owner. However, this kind of backroom underhandedness being done by Charles Wang should force the NHL's hand in having him turn over the rights to the franchise to Ledecky and Malkin much earlier. I can't see any other way to punish him from the league's standpoint.

As for what he did ethically, Wang just proved he's a jerk. Peak Ridge thought they had a deal, Andrew Barroway thought he had a deal, and it finally came down to squeezing the most money out of Ledecky and Malkin for the Islanders. While I get that every good businessman never wants to walk away from something having lost money, Charles Wang showed how classless he is when he had Peak Ridge sign a purchase and sale agreement.

What is this "purchase and sale agreement" thing? According to the University of Calgary,
The term "purchase and sale agreement" refers specifically to the contract between the vendor and purchaser for the transfer of either shares or assets of a going concern business. More generally, the term identifies the entire process of formalizing the sale of a business. This process typically begins after the vendor and purchaser have agreed to the sale. The purpose of the agreement, as with most forms of legal contracts, is to provide certainty as to the value, identity and ownership of the assets or shares to be sold, and the amount and method of payment to be provided in exchange for the assets or shares.
I conveniently bolded the key phrase in that passage as it reads, "typically begins after the vendor and purchaser have agreed to the sale". If what Peak Ridge is saying is true, Wang technically agreed to sell the Islanders to Peak Ridge at the designated price because Wang sent "Peak Ridge a purchase and sale agreement that in many sections is identical to the one sent to Barroway". So, in fact, we have Wang selling the same thing three times, but legally only transferring ownership to Ledecky and Malkin after he formally accepted their offer.

I'm not sure of the legal ramifications on this one, but Charles Wang broke a few written promises on this one. Just to spite him, the judge in the Barroway lawsuit should make Wang pony up some cash just to teach him a lesson. Justice for being a jackass, I say.

Until next time, keep your sticks on the ice!

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