Report: More Details On WWE-XFL Lawsuit
It could escalate into a class action lawsuit...
On December 26th, an Oklahoma Firefighters Pension Fund filed a lawsuit against WWE in the Delaware Court Of Chancery. An initial report from Bloomberg Law revealed The Pension Fund believes there is a "credible basis to believe" that senior executives in WWE have diverted resources to the XFL, breaching their duties to shareholders.
The lawsuit also claims that members of WWE’s board have failed to conduct appropriate oversight to ensure Vince McMahon did not carry out transactions which conflict with WWE’s interests.
Last night, Wrestlenomics' Brandon Thurston revealed additional details about the lawsuit on Twitter. He explained the main complaint from the plaintiffs is that there are numerous conflicts of interest between WWE and Alpha Entertainment, the parent company of the XFL, which are both owned by McMahon.
They allege that WWE's intellectual property was sold to Alpha Entertainment for considerably less than market value. The Pension Fund uses the example of the XFL IP which WWE sold to Alpha for $1 million. They believe this is not fair market value as before establishing the Alliance Of American Football, Charlie Ebersol estimated the XFL IP was worth $50 million and allegedly made an offer of that amount to WWE, which McMahon rejected.
The plaintiffs also believe WWE employees' services are being used by the XFL for an amount considerably lower than what the company would charge another third party.
The final allegation they make in the lawsuit involves how Vince McMahon's contract with WWE was restructured once he announced the creation of the XFL. McMahon's contract states that he cannot work for competing businesses and WWE's filings to the Securities And Exchange Commission state that the company's competition includes professional sports. Despite this, McMahon restructured his contract so that he could own the XFL.
The lawsuit also claims that members of WWE’s board have failed to conduct appropriate oversight to ensure Vince McMahon did not carry out transactions which conflict with WWE’s interests.
Last night, Wrestlenomics' Brandon Thurston revealed additional details about the lawsuit on Twitter. He explained the main complaint from the plaintiffs is that there are numerous conflicts of interest between WWE and Alpha Entertainment, the parent company of the XFL, which are both owned by McMahon.
They allege that WWE's intellectual property was sold to Alpha Entertainment for considerably less than market value. The Pension Fund uses the example of the XFL IP which WWE sold to Alpha for $1 million. They believe this is not fair market value as before establishing the Alliance Of American Football, Charlie Ebersol estimated the XFL IP was worth $50 million and allegedly made an offer of that amount to WWE, which McMahon rejected.
The plaintiffs also believe WWE employees' services are being used by the XFL for an amount considerably lower than what the company would charge another third party.
The final allegation they make in the lawsuit involves how Vince McMahon's contract with WWE was restructured once he announced the creation of the XFL. McMahon's contract states that he cannot work for competing businesses and WWE's filings to the Securities And Exchange Commission state that the company's competition includes professional sports. Despite this, McMahon restructured his contract so that he could own the XFL.
Written by Aidan Gibbons
Editor-in-Chief of Cultaholic.com Twitter: @theaidangibbons
