Houston Astros owner Jim Crane sues previous owner, TV partner for fraud

As if 324 losses in three years aren’t bad enough, the Houston Astros ownership group led by majority owner Jim Crane is suing previous owner Drayton McLane, Comcast Sports, and the National Broadcasting Company Universal for misrepresenting assets at the time of sale.  The Houston Chronicle’s David Barron, who has been covering the Astros TV debacle since its inception, has been on the story and has the report:

The suit accuses McLane, who sold the Astros to Crane in 2011, of selling “an asset they knew at the time to be overpriced and broken,” referring to McLane’s interest in CSN Houston, and said that Crane bought McLane’s network interest based on what have proven to be “knowing misrepresentations” and “falsely inflated subscription rates.”

“Ultimately, fans of the Houston Astros have been injured because defendants’ misrepresentations with an impossible choice: either accept the broken network as is and deprive thousands of fans the ability to watch Houston Astros games on their televisions, or distribute the game at market rates and take massive losses out of the Houston Astros player payroll – thereby dooming the franchise for years to come,” the suit adds.

Drayton McLane hands the reigns to Jim Crane, now combatants in court. (Credit: Houston Chronicle/Karen Warren)

Drayton McLane hands the reigns to Jim Crane, now combatants in court. (Credit: Houston Chronicle/Karen Warren)

For those new to the story, the Houston Astros and Houston Rockets entered a partnership with NBC Universal to have their Comcast Sports group form a network primarily for Astros and Rockets games.  The Astros own 46%, the Rockets 31%, and NBC/Comcast 23%.  The partnership seemed to think everything through except pricing and distribution.  They’ve been asking high rates (according to cable and satellite providers) and had no takers.  Therefore, 60% of the Houston market has not been able to watch the Astros or Rockets for just over one year now.  It hasn’t helped that the Astros have been beyond lousy, and the Rockets a borderline playoff team (even with the signing of Dwight Howard).

The Rockets interest is much less, because they cannot penetrate the Dallas, San Antonio, Oklahoma City, or New Orleans markets because of NBA territorial restrictions.  MLB restrictions are lighter and they would be able to show games in those markets.

The whole financial deal is in bankruptcy court as the CSN Houston/NBC partnership, with no revenue, haven’t been paying their rights to the Astros.  And fans have been left in the lurch, although being spared from the losing Astros teams may not be all bad.

Crane and his group bought the Astros for $615M, after commissioner Bud Selig and Major League baseball would not approve the sale until the Astros agreed to change leagues (original deal was $680M until the pot was sweetened).  The Astros have eliminated all payroll essentially (under $30M) and are financially healthy other than this TV deal.

I’ll just cut to the chase and the end.  This financial agreement will be disbanded in court, money will change hands, and the Astros and Rockets will probably just sell their rights back to Fox Sports, who had been showing the games until this ill-fated idea started a number of years ago.

- David Whitlock

Related Stories:
According to Nielson ratings, zero fans watched Houston Astros on TV on Sunday
Houston Mayor trying to broker deal between Astros and network carriers
Houston Astros rebuilding, but new owner comments may rile fans

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[05:21:31 م] Jason Whitney: