A yearlong breakdown in the Mavericks’ and Stars’ relationship came to a head Tuesday morning, when Dallas’ NBA franchise filed suit against the city’s NHL team.
The teams have had uneven starts to their 25th seasons as American Airlines Center’s tenant couple, but their court and ice struggles appear benign compared to the behind-the-scenes strife in the organizations’ relationship.
Late Tuesday morning, Mavericks ownership filed in Texas Business Court a 253-page petition for injunctive relief against Stars’ ownership, seeking legal finality on a breach of contract dispute the Mavericks raised in October 2024.
The Mavericks allege the Stars are in breach of a clause in their 1998 franchise agreement that requires their corporate headquarters to be located within the city of Dallas, while also claiming in the injunction that the Stars have obstructed further maintenance and improvements to American Airlines Center. The Stars’ headquarters and practice facility have been located in Frisco since 2003.
Mavericks
Both the Stars and Mavericks, who have shared the arena since it opened in 2001, could leave AAC after the current lease ends in 2031, with the Mavericks seeking to build a new basketball-only arena in the city of Dallas and the Stars entertaining offers from other cities, including Plano and Frisco.
The Mavericks first raised awareness of the clause over a year ago, a few weeks before the Mavericks and the city say the Stars backed out of a $300 million deal to renovate AAC, according to interviews and documents obtained by The Dallas Morning News.
In the deal, according to the city and the Mavericks, the Stars agreed to remain in AAC through 2061 and would have paid no renovation costs, with the city and Mavericks footing the bill, 50-50.
The Stars strongly deny they agreed to the deal and say had it gone through, half of the renovation costs would have been shared by the Mavericks and Stars. The Stars maintain they agreed to a different deal that would extend the existing lease with both teams staying at AAC through 2035.
“The partnership would support it,” Stars President and CEO Brad Alberts told The News in an interview Tuesday. “We never asked to not be included in helping pay for this. That’s untrue. We never had any intention of the Mavs and city doing it for us. We’re not asking for charity. We were always on board with our 50% of that.”
The Stars declined to comment on the legal filing.
The Mavericks seek legal confirmation as the sole owners of the “Arena entities.”
“To put it plainly,” the injunction states, “the Stars are holding the American Airlines Center hostage.”
“The success of the Mavericks and Stars is important to fans across the Metroplex, and the outcome of this litigation will not impact either team from playing at the American Airlines Center now, or through the end of the current team leases in 2031,” the Mavericks said in an emailed statement after the injunction was filed.
“Fans of both franchises should have every expectation that the experience of coming to support their teams will continue as it always has.”
Days after last year’s deal collapsed, the Mavericks on Oct. 25, 2024, cited the breach of contract and seized the Stars’ half of AAC’s operating company.
The City of Dallas sided with the Mavericks, affirming the contract breach, both last October and in December, when city attorneys prepared a default letter to the Stars.
For the past year, the Mavericks have withheld the Stars’ quarterly arena proceeds and kept them in escrow. The Stars say the amount escrowed is “in the tens of millions.”
Change of course
One city document describes 10 months of enthusiastic and lockstep planning preceding last October’s AAC alleged agreement, but the Stars say they largely were kept in the dark while Dallas and the Mavericks planned. Nowadays, Dallas’ NBA and NHL franchises primarily communicate through attorneys.
Records also show that Dallas Mayor Eric Johnson, City Manager Kimberly Bizor Tolbert and other city officials have tried to re-engage the Stars in negotiation about AAC, while at the same time collaborating with the Mavericks about a new downtown basketball-specific arena as part of an entertainment district.
Just four weeks ago, in an Oct. 3 letter to Stars owner Tom Gaglardi, Tolbert recapped the Stars’ “baffling change of course” and ensuing fallout, including the team’s months of mostly silence before, on Sept. 9, upping their AAC improvements request to at least $400 million to $500 million.
Tolbert reiterated the Stars’ importance to Dallas and implored Gaglardi to personally return to the negotiating table. She also officially notified him that the Stars did breach a clause in their 1998 franchise agreement, signed after voters approved funding for AAC’s construction.
Four days after Tolbert’s letter, the Mavericks referred to Tolbert’s breach notice as legal reinforcement of their action last October, when they cited the breach and sent $110 in federal reserve notes to purchase the Stars’ half of Center Operating Company, which manages AAC.
Since then, the Stars’ monthly Center Operating Company revenue payments have been held in escrow with Chicago Title Company.
In their Oct. 7 letter to the Stars, emailed and overnighted by courier from the law firm Jackson Walker LLP, “Dallas Sports Group LLC and Radical Arena, Ltd. (collectively, the Dallas Mavericks)” reminded them there is a legal remedy to retrieve the funds.
“We would appreciate your confirmation that the Stars’ interest in Center Operating Company and its General Partner have been acquired by the Dallas Mavericks at your earliest convenience,” the letter states.
“The Dallas Mavericks look forward to discussing the path forward with the Stars and the City later this month per the City’s request.”
It’s unclear how or if the Stars’ law firm replied to the Oct. 3 and Oct. 7 letters, but Tolbert’s letter wasn’t the only Stars-related occurrence that day.
A Stars relocation?
A news report emerged that the Stars were eying Plano as a potential destination for a new arena. The Stars say that minutes after that report, Tolbert’s letter arrived in Gaglardi’s email inbox.
That evening, Alberts told The News the Stars also were engaged in discussion with Frisco, The Colony, Arlington and Fort Worth.
The Stars haven’t ruled out remaining in AAC past the teams’ July 2031 lease expiration, Alberts told The News, but he also said:
“Creating 365-day revenue, I feel, is essential to the health of sports and entertainment businesses, especially NHL businesses that depend on local revenue far more than others.
“I think the biggest problem that we have with staying in Dallas is that we don’t have that. We don’t control any of the real estate outside of the building. We’re looking for that opportunity that can create 365-day-a-year revenue outside and also have an incredible in-venue, in-arena experience.”
Postponed renovations
Viewed through a broader lens, it’s no surprise the Mavericks and Stars are at odds.
They have shared a venue since 1993, when the Stars franchise moved from Minneapolis and joined the Mavericks in Reunion Arena, but former Mavericks governor Mark Cuban began voicing plans for a new arena more than a decade ago.
For much of that decade, the Stars consistently stated a desire to greatly refurbish AAC and for both franchises to remain there beyond their current lease agreement, which expires in July 2031.
Despite their differences, through their 50-50 partnership in Center Operating Company, the Stars and Mavericks collaborated to fund a combined $100 million in improvements to AAC, which opened in 2001 at a cost of $420 million.
In late September 2023, the Mavericks, Stars and AAC general manager Dave Brown proudly unveiled new scoreboards and 19,134 new seats among $20 million in upgrades, the largest round of capital improvements in the arena’s history.
Alberts told The News then that more enhancements were needed, including better concession offerings, upgrades to premium hospitality spaces – and, logistically, new routing for foot traffic from parking garages.
“Obviously, this goes to where us and Mark [Cuban] have had some disagreements on where we go with the arena,” Alberts said.
Three months later, Cuban sold his controlling interest in the Mavericks to the Miriam Adelson and Patrick Dumont families. Alberts was elated, telling The News in a text message he’d long known and respected Adelson, Dumont and the hospitality prowess of their company, Las Vegas Sands.
When Dumont flew to Dallas on Feb. 12, 2024, for his first in-person game as team governor, the first person with whom he met in AAC was Alberts, for 30 minutes. Both told The News of a shared vision to significantly upgrade AAC, regardless of whether the Mavericks built a new arena.
On Sept. 16, 2024, Center Operating Company filed for state licensing for a $30 million project for elevator and escalator modernization and extensive slab work to improve “patron circulation.”
That work was scheduled to begin the following month, but it’s twice been postponed, most recently to the summer of 2026.
Timeline of events
Documents obtained by The News provide context and clarity to a scene in AAC’s Jack Daniels Club on Oct 11, 2024.
Amid aromas of pizza, barbecue and cheesesteak, AAC general manager Brown, Alberts and then-Mavericks CEO Cynt Marshall took turns extolling the cuisine at an unveiling of the arena’s new food offerings.
The trio seemed especially upbeat – giddy – even though Marshall three days earlier had announced she would retire at year’s end.
“We have incredible partners,” Marshall said. “We have one of the top venues in the country and now we’re making it even better.”
Extra-prophetic, or so Marshall probably thought. Three days earlier, the City of Dallas and Mavericks believed all sides had verbally agreed to the $300 million renovation plan, documents show.
During that meeting, according to Tolbert’s Oct. 3 letter, Alberts apologized for the Stars moving their headquarters to Frisco 16 years earlier, saying the franchise was unaware of the lease breach and would commit to returning to Dallas by December 2025. Alberts told The News Tuesday that the Stars opened an office in Dallas last fall to comply.
On Oct. 4, the City of Dallas finalized the proposed agreement and shared it with the Mavericks and Stars. Alberts told The News on Tuesday that that was the first he had seen of proposed terms since an August meeting.
On Oct. 9, the AAC renovation plan by Gensler Dallas was reviewed by Center Operating Company, Alberts, Stars Chief Revenue Officer Matt Bowman and Mark Boekenheide, who was representing Mavericks ownership. On the 10th, the City of Dallas finalized the agreement document.
“I believed we had finalized deal terms,” Tolbert wrote in her letter to Gaglardi three weeks ago. “The Stars had no financial obligation.
“In exchange for the City of Dallas and Mavericks investment, the draft term sheet included, with Brad’s concurrence, the Stars would play all home games at the AAC through 2061 and build and operate a StarsCenter multisport arena in southern Dallas to be supported by up to $50 million from the City of Dallas.
“The Dallas Mavericks would stay at the AAC through 2031 and then move into a newly constructed NBA arena.”
Alberts told The News that characterization is false.
“We didn’t agree to anything,” he said. “We had not talked to ownership. I had not talked to legal counsel about it. I had not even reviewed it with my executive team. That was the first full meeting I’ve ever had with the city and the Mavericks to discuss the terms of the deal. We needed time to dot the I’s and cross the T’s and that’s all we asked for.”
Alberts said on Aug. 20, he approved terms that were being discussed at the time: That the Stars and Mavericks and city would extend the AAC lease agreement through 2035-36 and that the Mavericks and Stars would work through details of the renovation.
He said the Mavericks were responsible for taking the terms to the city on behalf of Center Operating Company, and he was not present in the negotiations that happened.
“At no time did anyone communicate with me that those terms had changed until I received an initial term sheet on Oct. 4 and then met with the city and the Mavericks on Oct. 8 and saw that we were being asked to stay until 2061 and the Mavericks were allowed to leave in 2031,” he said. “That created issues for us.”
Tolbert’s October letter further states that she, Alberts and Marshall had agreed to hold a specially called City Council meeting on Oct. 24, 2024.
“We also planned a public announcement event to be held at the Mavericks season opener later that day,” she wrote. “Everyone walked out of that room in lockstep — the deal terms gave everyone what they claimed to want.”
She added in bold-face: “The Stars would receive a renovated arena and a long-term home in Dallas with no financial commitment.”
Tolbert’s letter and timeline of events state that on Oct. 14, 2024, Alberts alerted Dallas assistant city manager Robin Bentley that the deal was off and that during a phone call with Dumont the following day, “Brad blew up on PD; the root of the blowup was that the Stars want to stay connected to the Mavs indefinitely.”
Six days later, according to the timeline, Alberts indicated that the Stars would extend their AAC lease agreement to 2035 if the Mavericks also did so.
On Oct. 25, 2024, the Mavericks sent the $110 check and informed the Stars that in light of the 2003 lease breach, they were exercising their contractual right to purchase the Stars’ interest in Center Operating Company.
The Stars’ franchise agreement with the City of Dallas is dated July 28, 1998, but the 30-year lease term did not begin until the arena opened.
Article II of the agreement is titled “Location and Other Team Obligations.”
Section 2.1 states in part: “Throughout the Term, the Owner shall continuously designate the City as the location (a) in which the Home Games shall be played, and (b) in which the principal corporate and executive offices of the Team shall be maintained.”
Why now?
The Mavericks’ 1998 franchise agreement with the city has the same wording.
Frank Zaccanelli, the Mavericks president under then-team governor Ross Perot Jr., recalls negotiating all of the team’s AAC-related documents.
Zaccanelli, 70, says the franchise agreement provisions largely were to protect those who purchased $140 million in revenue bonds that funded the city’s $125 million contribution to the arena’s construction cost.
Ostensibly, the “location commitment” also protected Dallas from loss of revenue and prestige if the Stars or Mavericks moved their headquarters.
Tolbert’s timeline states that when the Mavericks and Stars last October informed the city of the Mavericks’ breach claim, city staff confirmed the Stars never received a waiver or contract provision. Not explained is why apparently no one from the city noticed the Stars’ breach in 2003.
“We don’t understand why this is an issue now,” Alberts said. “It hasn’t been an issue for 20years. We all know that the headquarters has been in Frisco. At the same time, we responded a year ago and made a change and developed an executive office in Dallas, and we’re continuing to expand that now so we have a presence in Dallas. We don’t understand why that is an issue. It never was for 25 years.”
Also notable is that the Mavericks did not enact their right to take 100% ownership of Center Operating Company until after the Oct. 8 deal fell through. Regardless, Tolbert made it clear in her Oct. 3 letter that a deal is salvageable – and wanted by Dallas.
“Since the Stars walked away … the City of Dallas has continued to work to revive the proposed deal, reengage in conversations and get the Stars back to the table.”
On April 11 of this year, Mayor Johnson hosted a meeting with Gaglardi and Dumont during which “the Mavs asked the Stars to convey what they wanted” and “the Stars never responded.”
Tolbert’s timeline states that Dumont and Gaglardi again spoke, by phone, on May 15 without resolution or clear asks from the Stars.
It wasn’t until Sept. 9, Tolbert wrote, that Alberts “sent an unofficial list of the Stars’ requirements out of respect for my requests. I appreciate that Brad was clear in our conversation that the list is only a starting point for discussion.”
Then she addressed Alberts’ requests, one by one, including.
– The Stars asked the Mavericks to resolve the breach dispute and distribute the escrowed AAC revenue. Tolbert wrote that the city is not party to the Mavericks-Stars partnership or legal dispute and that the teams must resolve that on their own.
– The Stars asked Dallas to fund $400 million to $500 million in AAC renovations without financial obligation from the team. Alberts also asked Dallas to fund all future capital expenses to maintain AAC.
“It is unclear to me how this new inflated renovation budget was developed,” Tolbert wrote. “Unlike our October 2024 proposed deal terms, the Stars’ new request has no cost sharing or contribution by AAC tenants or management . . . This request is beyond unreasonable.”
– The Stars requested that Dallas waive all AAC rent, which is $3.4 million annually, evenly split between the teams, the same terms as the past 24 years. Tolbert noted the October 2024 proposed deal was for an inflation-adjusted $6.6 million annually.
“It is unreasonable to expect the City of Dallas to allow use of a city-owned facility for free,” she wrote. “Gifts of taxpayer funds or public facilities are not allowed under state law.”
Nonetheless, Tolbert was optimistic they could “find a path forward that honors our shared vision and long-standing relationship,” she wrote, adding that the Stars are deeply woven into Dallas’ fabric.
“A move away from the AAC would not only disrupt a successful and enduring relationship, but it would also abandon a fan base and community that has embraced and uplifted this team for over three decades.”
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