New documents shed light on Hounds-One Loudoun stadium dispute
A four-day trial to decide a lease for the stadium has been set for October after a judge denied One Loudoun's request for a summary judgment.
The trial date again puts the long-delayed stadium on hold.
Court documents filed in the One Loudoun-VIP dispute outline a long and often contentious battle rife with miscommunication and unresolved questions.
At the end of 2014 VIP's bank account contained only $671.63, enough to pay each of its 61 investors roughly $11.01. Those same investors gave roughly $7 million, VIP told the court in one document.
It seemed like a pretty good deal for the investors when KPMG, a global accounting firm, conducted an independent income valuation, which said VIP could expect to bring in $69 million "over a period of years."
VIP also received a $3.25 million loan from Eagle Bank. The Maryland-based lender ultimately took VIP and its CEO Bob Farren to court in Maryland over non-payment.
According to court documents the Hounds even signed a contract to give naming rights to Edelman Financial worth $10 million.
The documents don't make clear whether the $10 million deal only cleared after the stadium was built, or whether they had naming rights to the stadium in perpetuity, but to put that number in perspective, FedEx pays the Redskins $7.59 million per year to name its Landover, Md. stadium.
One former executive at the company told the Times-Mirror under the condition of anonymity that VIP had upwards of $13 million in its coffers at one point, which it obtained through bank debt, bridge loans and investors.
Where did it go?
Millions of dollars went to architectural services; millions were paid for grading and attempting to get an area ready both at Kincora and One Loudoun; possibly a million was spent trying to keep up with payroll, which included a six-figure salary for both Chief Financial Officer Harry Stokes and Farren; hundreds of thousands of dollars on branding and marketing; and "a lot of money wasted on securing financing," according to the executive.
At the peak of VIP Baseball, as many as 10 people were on the payroll or doing consulting, working out of a Pacific Boulevard office.
Farren and Stokes jointly owned 29 percent of the entity.
"Then there was also frivolous spending on season tickets for the Capitals, Nationals and $100,000 spent on a Creighton Farms membership," the anonymous source said.
Farren is responsible for coming up with the idea to bring a minor league baseball franchise to Loudoun.
He thought up the idea in the early 2000s and used his background as a salesman to raise the money and market a brand out of whole cloth.
The interest in the Hounds peaked in 2011, shortly before VIP signed a lease to relocate to One Loudoun, when the company held FanFest, a 10,000 person pep rally for the ballpark.
The pomp was palpable. Harmon Killibrew was brought in to sign autographs, as were other major baseball celebrities, even Fetch, the affable Hounds mascot.
Then VIP signed a lease with One Loudoun in 2012. The plan was to have opening day ready for 2014, or 2015 at the latest.
In 2013 shovels hit the dirt on the project, and throughout the year personnel was shifted or laid off. By late 2013 Mark Stavish, a VIP investor, took over as CEO.
"When Mark Stavish took over, that was the only time when this seemed like it had any legitimacy," said the executive.
Bob Farren re-instated himself in early 2014.
In May of that year Loudoun Board Chairman Scott York attempted to bring the two entities together in order to work out any problems, but they were likely far past any amicable ending.
VIP alleges One Loudoun failed to convey the property to them, provide a formal notice to proceed with construction, install utility hook-ups, install lights and sidewalks, level the ground on the site or obtain the correct plot plan for the property.
They further alleged One Loudoun unreasonably withheld and delayed approval on multiple occasions of VIP's designs of the baseball stadium and other areas on the property.
The lease agreement, however, states the land was to be deeded over to VIP "as-is."
In one court document VIP lays out all the ways One Loudoun acted in bad faith.
"One Loudoun, and/or its agent, made disparaging remarks about VIP to the Atlantic League, certain VIP investors, and other individuals about the VIP's ability to perform its obligations under the Lease," said one section of the court document.
Another VIP investor, Alvin Hall, said "in front of everyone that if VIP does not demonstrate to our satisfaction to build a ballpark, we will wait until May 2014 to build a ballpark ourselves,” according to court documents.
"When no construction happened after groundbreaking in 2013, that's when it became clear the emperor had no clothes," said another former VIP employee. "The people who could get this thing financed, [Farren] didn't listen to."
"He [Farren] was completely delusional about it," said the executive. "There is nothing One Loudoun did to prevent baseball at One Loudoun."
"Let's say One Loudoun did have it all graded, there's no way Bob could have turned around and built on the land because he didn't have the financing," he added.
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