April 14, 2017 By Jake Nutting
by JAKE NUTTING
Tampa Bay Rowdies Owner Bill Edwards has followed through on last year’s threat of legal action against the North American Soccer League over its ties to Traffic Sports, the company brought down in the FBI’s 2015 investigation into FIFA corruption.
Edwards filed a lawsuit in Pinellas County on Thursday, alleging he was enticed to purchase the Rowdies in 2013 through fraudulent, incomplete or misleading information from then NASL Commissioner Bill Peterson and ex-NASL Chairman Aaron Davidson. The NASL, Davidson, Traffic Sports USA, and NASL Team Holdings, LLC (the corporate entity for holders of the league’s Class B Shares) are all listed as defendants in the case.
Traffic was instrumental in the founding of the modern NASL and continued to be until the 2015 scandal. When the FBI indictments came down Davidson was still Chairman of the league’s Board of Governors and the company owned the Carolina RailHawks and Fort Lauderdale Strikers.
The Brazilian sports rights company’s founder and owner Jose Hawilla pleaded guilty to racketeering conspiracy, wire fraud conspiracy, obstruction of justice and money laundering in 2014 as part of the FBI’s investigation that came to ahead in May of 2015. Davidson pleaded guilty to the same charges last October and is set to be sentenced on April 24.
In pleading guilty, Traffic officials admitted to paying millions in bribes to high-ranking officials between 1991 and 2013 to secure exclusive TV rights to lucrative CONCACAF and Copa America events. Edwards contends that the NASL made this a prominent part of its pitch to get him to purchase a controlling interest in the Rowdies. The St. Petersburg mogul believes Davidson withholding Traffic’s illegal activities when selling him on the league constitutes fraud and that the NASL was negligent if it was unaware of the crimes were being committed.
“[NASL] and Davidson made misrepresentations of material facts when they failed to disclose all facts about Traffic Sports, including its criminal activities and the League’s ongoing dispute with Traffic Sports,” read the complaint filed by Edwards in court.
Edwards is seeking to have TBR Holdings’, the holding company of the Rowdies, original franchise agreement with the NASL declared void and to be freed from the Guaranties he was required to take on as an owner in the league.
This offseason has not been a cheap one for Edwards. The NASL reportedly charged him a $1.5 million exit fee and the United Soccer League required a hefty expansion fee to join. Should Tampa Bay’s franchise agreement with the NASL be deemed void, Edwards could recoup some of the recent expenditures.
“Had the [NASL] and Davidson not defrauded Edwards, he would not have been the Principal Owner of the [Rowdies] and thus the terms of the LLC agreement would not apply,’ stated the complaint. “Those terms include a withdrawal payment and a default payment, which the league contends it is owed by [TBR/Edwards].”
Another point of contention in the lawsuit deals with Traffic’s status as a majority owner in the league’s Class B shares. The league was split into Class A and Class B shares, with the former consisting of every owner in the NASL and the latter primarily Traffic. As primary stakeholder in NASL Team Holdings, LLC, Traffic was entitled to a significant cut of expansion and withdrawal fees, a fact that was the source an ongoing dispute between the league and Traffic that Edwards says he was not aware of until he became an owner.
NASL Interim Commissioner Rishi Sehgal recently stated that the NASL has eschewed this A and B share structure and is now “100 percent owned and operated by the team owners.”
Edwards is claiming his team is entitled to 23.08 percent of the money paid to Traffic after September, 23 2015 from its Class B shares. Included in court filings for the lawsuit is a 2015 letter from Edwards exercising Tampa Bay’s option to secure a 23.08 percent stake in the NASL Team Holdings. The letter cites a stipulation in the team’s agreement to divest in Team Holdings, LLC in 2011 (also included in evidence), which granted it the option to reinvest in the entity the next time it admitted a new member at the same amount and rate as said new member.
Another letter in evidence from a representative of Edwards outlines that the option to secure an interest in NASL Team Holdings became available as a result of Traffic agreeing to transfer 25 percent of its interest to the New York Cosmos as part of the 2012 agreement that brought the Cosmos to the NASL. According to the letter, a presentation from Traffic in 2012 stated that the company would hold a 69.23 percent interest in NASL Team Holdings, the Cosmos (New York Cosmos, LLC) 23.08 percent, and FC Edmonton’s owners (Fath Sports) 7.69 percent. The letter also claims the Cosmos were offered the shares without any financial consideration in return.
This week’s action is not the only lawsuit involving Edwards and the NASL. He is also suing the league and the owners of the Fort Lauderdale Strikers, seeking repayment of multiple loans made to the South Florida team last year. The Strikers are sitting out this season as they and the league seek new investors to take over for the team’s Brazilian ownership group.
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