Another sports deal sours in the Sacramento area, following on the heels of the Maloof vs the city of Sacramento kings stadium fight. This one involves the investment group that was formed to help finance the RiverCats baseball deal in West Sac.
They Don't Call Them Savage For Nothing
The participants in this fight are a family trust that invested nearly 1 million in the deal, and the investment group that was formed to manage the profits and losses of the baseball enterprise that hosts the RiverCats team, with particular emphasis on the management at the top, Susan and Jeff Savage.
The primary issue at hand appears to be disclosure of financial information that the Loder Family Trust asked for when their investment dividends dried up after 2006. The Savages are claiming there just wasn't any distributable funds after that time, and as such, they weren't required to make any records available. The Loder Trust has sued in Sacramento, claiming that more than one clause in the contract entitles them to the information, and they have taken particual interest in where the money goes for expenses prior to any residual profits meant for investment dividends. The Trust is also interested in why there have been no minutes taken at corporate meetings where some expenses were approved
Some excerpts from the case are below:
Loder complied with its obligations as a member of RCBIG as set forth in the
Operating Agreement. RCBIG did not deal in good feith with Loder by, among other things:
(1)withholding the RCBIG Books and Records from Loder;
(2) failing to disclose the Transactionsto the Members of RCBIG until the distribution of the Member Approval, which still fails to state the specific terms and conditions of the Transactions not to mention its distribution ten years after RCBIG entered into one of the financing Transactions; and
(3) entering into the Transactions without first seeking the vote or consent of the RCBIG members when each Transaction was entered into between RCBIG and a Savage family member of entity affiliated with one of more Savage family members.
Based on the foregoing, Loder seeks an order ofthis Court appointing a Receiver
(a) Assume the responsibility of managing RCBIG as well as RCBIG's assets;
(b) Pay RCBIG's bills;
(c) Provide accountings on a monthly basis showing the income and expenses of RCBIG;
(d) Perform an audit of RCBIG's books and records from 2000 to the present to determine the propriety of RCBIG's expenditures of RCBIG's funds, expenditures by RCBIG related to compensation for the managers and officers of RCBIG, payments made to or on behalf of Art Savage, Susan Savage and/or any Savage family member, and expenditures by RCBIG as a result ofthe Transactions.
(e) Employ such accountants, attomeys, and other professionals necessary to perforin the accounting, to manage RCBIG, and to compel delivery to the Receiver of all books and records of RCBIG; and
(f) For such further Orders and Receivership authority deemed appropriate or necessary.
Section 3.6 of the Operating Agreement permits a member to inspect Company
records only for purposes reasonably related to the member's membership in RCBIG. In
order to understand your purpose for making additional information requests, my
personal counsel, Charles Post, spoke with you on June 23, 2011. My understanding of
that call was that Mr. Loder's purpose for making these requests was to determine why
RCBIG disconfinued making cash distributions to its members after 2006. The reason RCBIG did not make distributions after 2006 was because RCBIG did
not have cash available for distribufion. We believe that the financial statements and tax
returns that Mr. Vistica sent to you with his May 10, 2011 letter demonstrate this. As
those documents demonstrate RCBIG's financial performance in each of 2007 through
2010 did not provide RCBIG with adequate cash to make distribufions to the members.
As a result, RCBIG has concluded that it has provided Mr. Loder with documents reasonably related to his stated purpose, and RCBIG does not plan any producfion of
supplemental informafion Mr. Loder has requested.
Of course, RCBIG is prepared for, and welcomes a continued discussion ofthis or
any other request for information Mr. Loder may make. If Mr. Loder believes RCBIG has
misunderstood or misstated his purpose in seeking the addifional information identified
in your letter, please let me know as soon as possible. If Mr. Loder requests further
informafion and specifically sets forth other purposes forthe informafion that are
reasonably related to his membership in RCBIG, RCBIG will be happy to consider his
As always, we appreciate the support of our members and their interest in our
River City Baseball Investment Group, LLC
The Baseball Investment Group hasn't responded to this accusation in court yet, but one of the responses alleged by the Loder Trust was that the investment group asked if the trust would like to sell their shares.
Sure.....starve them out and then buy at fire sale prices