David Freeman announced today via a letter from his attorney that he is stepping down as the Chairman of the Nashville Predators. The letter was delivered to the Nashville Sports Authority mid-morning by Freeman's counsel, J. Allen Roberts of the firm Wyatt, Tarrant, and Combs.
At first blush, this appears to be bad news for the Predators and the ownership group. However, further examination of this action by Freeman is both practical and prudent on his part.
The point of contention between the Sports Authority and David Freeman is whether he is in default on his personal guaranty to the City because of an unresolved tax lien placed on Freeman for his 2007 taxes. Freeman signed the guarantee to the City in Aug. of 2008, and according to his attorney, was not in default at the time of the execution because the IRS had not disputed his 2007 tax filing.
Because of the subsequent dispute with the IRS and their filing of a lien on his personal property for $3.3 million, the Sports Authority is now attempting to to claim there was an "immediate breach" of the guaranty. This fact is disputed by Freeman's attorney, and common sense would side with this position. How would Freeman, or anyone, know they were in a breach or violation of the terms of the guaranty if the IRS had not filed their lien, which was not filed until 2009?
Freeman has publicly stated that there is a dispute with the IRS, and without providing specific details, has intimated that it is related to his business dealings with convicted felon William "Boots" Del Biaggio and his (Del Biaggio's) financial investment in the team. Freeman has also said that he has deposited a substantial portion of the disputed amount with the IRS and is awaiting a hearing with the IRS to resolve the matter.
There are two salient points here.
The first is that Freeman is exercising his rights under the tax code for a hearing and a ruling on this matter. Every taxpayer in this country, including those members of the Sports Authority, have a right to do so. These disputes arise from legitimate disagreements over interpretations of the tax code, and during the course of resolving these disagreements, the IRS will oftentimes file a lien on the assets of the party involved to protect their interests. Regardless of the filing of the lien, there is recourse for a taxpayer to resolve a dispute.
Freeman has deposited a substantial portion of the disputed amount into an account with the IRS. This is evidence not only of his good faith efforts to comply with the tax code, but of his ABILITY to pay the amount in question. Don't lose sight of that fact.
The second critical point here is that the Nashville Sports Authority is asking Freeman to give up his rights as a taxpayer to resolve this dispute. The Sports Authority has demanded that Freeman pay the full amount of the taxes to the IRS. Freeman has refused, saying that he is not going to waive his right to a hearing.
So I would ask any member of the Sports Authority, would YOU waive your right to a hearing-essentially give up-if you were in a dispute with the IRS? How about it, Chairman Bodenhamer? Rusty Lawrence? What's that? No? I didn't think so.
In his letter to the Sports Authority, attorney Roberts states that many of the issues between the Sports Authority and Freeman seem to be driven "as much by politics and media relations as by legal issues..." Furthermore, he goes on to state "Mr. Freeman respectfully declines to waive his right to await a ruling from the IRS or set a deadline for a process that he does not control."
Good for you, David Freeman.
And shame on you, Nashville Sports Authority. By your actions, you are fast becoming an embarassment to the City of Nashville.
I understand that the Sports Authority is charged with, among other things, protecting the interests of the taxpayers that have financed the Bridgestone Arena and LP Field. That is understood and appreciated. The stance taken with David Freeman, however, has bordered on the absurd. As his counsel has stated, he does not control the process with the IRS, and is therefore unable to meet an arbitrary deadline, and asking him to waive his rights in a dispute with the IRS involving substantial amounts of money is ludicrous.
The relationship the Sports Authority has with Freeman, and by extension, the Predators, would lead a reasoned person to ask what is the end game for the Sports Authority? This team is growing deep roots in the city, and they are an exceptional business enterprise and corporate citizen. No hint of this team relocating exisits (hear that, Rusty?), and yet they are treated as if they are a pariah.
Local business people stepped up and pledged personal wealth to keep a valuable asset here for the good of this city. To be treated this way is an affront to the partners in this endeavor and to the citizens of the city who have entrusted you to excercise judgment and wisdom in running the Sports Authority.
The actions of the Sports Authority are petty, and they are uncalled for. These actions and demands are not protecting the taxpayers. In fact, I dare say the taxpayers of Davidson County might be more than a little bit perturbed with an empty arena sitting at 501 Broadway rather than with the viable tenant that presently occupies that facility. It is time for the Sports Authority to act with responsibilty and reasonableness and stop behaving like children.
David Freeman had the courage to invest significant personal wealth into a valuable asset for the city of Nashville. He had the courage and the ability to assemble a group of individuals that not only believed in the Predators, but in the vibrancy of Nashville. He has been rewarded with a slap in the face by the Sports Authority.
David Freeman is not out of the ownership group and he still has considerable personal wealth at stake in the Predators. He is, however, removing himself as a lightning rod for the Sports Authority so that his situation does not cloud the ownership group's relationship with the city.
So now let's see how the Sports Authority deals with the owners and the team.
Will they deal in facts, or will they continue to be driven by politics and media relations?