Here’s some insight into how Mark Cuban does business. Others have mentioned this information, but I’d like to share with you the e-mails and court filings that Cuban will attempt to have sealed in a hearing on December 1.
For those who haven’t been keeping up, Don Nelson claims Cuban owes him money. Last summer, an arbitrator agreed, ordering Cuban to pay him about $6.3 million. Cuban appealed to district court, where, last Wednesday, a judge confirmed the arbitration and ordered Cuban to pay even more (about $800,000 in attorneys’ fees, plus 5 percent annually until the judgment is satisfied).
But as you’ll see in the e-mails at the end of that PDF linked to above, it’s pretty clear that Cuban has no intention of paying his debts anytime soon. In a series of e-mails written in September, Cuban’s lawyer, Geoffrey Harper of Fish & Richardson, says:
I just follow orders. … [S]ince the rate for postjudgment interest is much less than the cost of capital, I think the team is making a business decision. (I don’t think anyone expects this to end differently than the current judgment; but apparently it is cheaper to use the money and pay later? I am not sure I understand it to be candid.)
Then, later that same day, Harper says:
[I]n the process of running all the numbers that we got from you, I think [Cuban] discovered that the team was better off paying don postjudgment interest after 2 years of appeals than paying him in full now and having to pay the price of capital. That led to a discussion with me last night about whether don would take a haircut to true up the numbers (i.e., Make it as least neutral for the team). … Mark was ready to pay until the cfo showed him how that was not financially smart.
So, in other words, Cuban, with his CFO’s help, has determined that paying his debts is actually more expensive than not paying his debts. And people question his intelligence?
