A longtime Plano football fan is gearing up for a fight with the Dallas Cowboys, after he says he was pressured into signing an expensive lease for a suite at AT&T stadium, then was sued when he stopped paying.
He’s not the only fan to face off with the Cowboys’ legal team over stadium suites.
Tarrant County civil court records examined by The Dallas Morning News show that Cowboys Stadium LP has gone to court more than 40 times — beginning in the weeks after the cavernous “Jerry World” opened in Arlington until June of this year — after holders of its luxury suites declined to pay up.
In more than a dozen cases, attorneys for the $1.2 billion stadium won seven-figure court judgments when the suite holders, who paid up to $450,000 annually, put up little to no defense.
But Jonathan Frankel, a former payment systems consultant turned venture capitalist, is prepping for a showdown. And he’s using complaints about stadium operations raised in other cases to bolster his claims about how far the suite sales staff will go to make a sale.
Past lease holders complained of promised aid from stadium representatives that never panned out and tepid efforts to get the suites re-leased quickly, thus increasing the amount of “damages.” One said he was told there would be a theme park, which was never built.
The Cowboys declined to discuss the suite suits and said in a statement, “As a matter of club policy, we don’t comment on pending or past legal matters.”
A question of value
Last December, Cowboys Stadium, a limited partnership owned by the family of team owner Jerry Jones, sued Frankel and Suite Football Dreams, an entity Frankel created to lease the suite. The suit is seeking payment of $4 million.
Frankel declined to be interviewed in advance of his trial, which has been pushed to next year.
His attorney, Rachel Kingrey, sees the case as a question of might and right.
“My clients, both Suite Football Dreams and Mr. Frankel, firmly believe they have done nothing wrong,” said Kingrey of Dallas-based Gardere Wynne Sewell.
“Cowboys Stadium made promises about the value of the suite that it didn’t keep. Cowboys Stadium is now attempting to use the judicial system to bully my clients just like it has used the judicial system to bully dozens of other faithful Cowboys fans over the past [eight] years.
“It is unfortunate that Cowboys Stadium chose this path, but my clients will not be intimidated and look forward to presenting their case to a jury of peers.”
From the earliest days of planning for what is now AT&T Stadium, suite leasing was a key part of the stadium’s financial backbone.
Scott Spencer is president of the Suite Experience Group, which helps consumers find luxury suites in venues nationwide.
He said stadiums and other venues use long-term suite lease contracts to give lenders who are financing the multi-billion dollar projects “the confidence of a reliable revenue stream from a diversified group of companies.
“This is just one of the many reasons teams need to enforce the suite lease contracts.”
AT&T Stadium boasts more than 300 luxury suites, including some at field level, which was still a novel concept when the venue opened with a George Strait concert in June 2009.
Fans agreed to leases stretching up to 20 years at annual rates that generally range from $200,000 to $375,000, depending on the location of the suite.
The contracts give the stadium partnership the right to call the full 20-year note due if suite holders stop paying the annual rent. Meaning that with the stroke of a pen, millions of dollars are on the line.
And from the earliest days of the stadium, the team acknowledged there was an issue with suite holders making good on those long-term deals.
In 2010, the Cowboys organization said it filed suit against 10 suite holders, some of whom blamed the just ebbed economic downturn. The organization described the suits as a last resort. But at the time of that announcement 14 suits had been filed, according to court records, and three more were filed days later.
A hard sell?
Frankel, who was a season-ticket holder at the Cowboys’ old home at Texas Stadium in Irving, had been hesitant to sign a lease at the new stadium because of the steep price tag, according to court records in the case.
He and a stadium representative “discussed the possibility of having an entity lease a suite,” court records show because “Mr. Frankel was adamant that he would not sign a personal guaranty related to a suite lease.”
A friend of Frankel’s offered to call Jerry Jones Jr., Dallas Cowboys executive vice president and the son of the team owner. According to Frankel’s deposition, Jones Jr. suggested to the friend that Frankel call a stadium representative about the suite.
Ultimately, Frankel said in a deposition, “the Cowboys suggested I form a company, ended up being called Suite Football Dreams, and that’s what I did.”
On Nov. 17, 2009, Frankel signed a lease for Hall of Fame level suite No. 216 “on behalf of Suite Football Dreams in his capacity as company president,” according to the court file.
Months later, in February 2010, the stadium partnership filed suit against another lease holder who also said the idea of creating a legal entity to lease the suite came from the stadium.
The stadium initially filed suit against suite holder Architel Holdings, a limited partnership, but later added Alexander Muse as a to the case. Muse, a managing member, signed the Architel lease agreement in the summer of 2008.
In his response to that suit, Muse explained the steps that led up to his signature. He said he was taken on a tour of the suites by Leslie Yarbrough, who is listed in the court file as “Stadium LP’s representative and agent” and is in the Cowboys 2016 media guide as a “Luxury Suite Sales Consultant.”
“Yarbrough … explained that many individuals had put together limited partnerships for the purpose of leasing a suite, and that Muse and [an associate] should do
the same,” according to Architel and Muse’s counter-claim against the stadium.
The question of why separate entities were created to lease some of the suites will be a key part of Frankel’s case. The stadium amended its suit against Frankel to assert that Suite Football Dreams “is the alter ego of Frankel and operated as a sham to perpetuate a fraud against Cowboys primarily for the personal benefit of Frankel.”
Frankel denies any fraud, notes that he paid more than $1.2 million in lease payments for the suite over the course of six years, and says, in the court filings, that the deal only fell apart when he realized he would not be able to use the suite for concerts and other events with a stage because the suite often faced the back of the stage.
(Source: Suite Experience Group )
The question of who said what turns up in several of the lawsuits.
In the Architel case, Muse said he was told the stadium would help find partners to help share the cost of the lease, an assertion the stadium denies.
In a 2012 case, a leaseholder complained that representatives working on behalf of the stadium partnership used “aggressive sales tactics” and made promises, including saying an entertainment or theme park would be built near the stadium for use by VIPs and suite holders.
Another leaseholder raised questions about whether the lease sales staff was being upfront about available inventory.
“Defendants have subsequently learned that the representation that a particular
suite was the last or almost the last remaining desirable suite at Cowboys Stadium was made repeatedly to many prospective tenants as part of a pattern and practice by Plaintiff to mislead potential lessees into signing leases,” according to a 2011 counterclaim against the stadium in the case of Cowboys Stadium v. King-Fisher.
Neil Patel was listed on the lease as managing partner with LP Investments, which was also a defendant in the King-Fisher case. Patel said he was told that “once all of the suites were leased, there would be an overflow of people and businesses wanting to lease a suite and that it would be no problem to [find] a partner for the suite by the time the stadium was completed,” according to King-Fisher’s counterclaim.
The stadium “never provided a partner for [LP Investments]. Nevertheless, plaintiff has refused to
release [LP Investments] from its obligations under the lease,” the counterclaim stated.
No deep pockets
In several of the suits, defendants said the stadium’s losses were due in part to its “failure to mitigate” damages by quickly moving to re-lease the suites.
The stadium has a duty to use “reasonable efforts” to re-lease the suite and use that revenue to reduce damages, according to Kingrey.
While court records show how much the ex-suite holders were ordered to pay, the files do not show how much the nation’s most valuable sports franchise has been able to collect.
Several of the companies appear to no longer be in business.
Sean Heaphy of New York was co-founder and co-president of REO Maintenance, which was slapped with a $7.5 million judgment in July 2011.
Heaphy commended Jerry Jones on doing “an amazing job” on the stadium but declined to answer questions about the judgment. He said REO Maintenance “doesn’t exist” anymore.
Oraios R. Ward is vice president of Pflugerville-based Pante Technology Corp., which faces a judgment of $3.4 million. It hasn’t been paid.
Ward, who said her husband, Martin Ward, signed the suite lease, said using the suite was “great … like no other experience.” She hopes to clear up the debt and perhaps return one day as a suite holder.
There might be a slight delay on both of those fronts.
Ward said her company’s revenue currently is zero.