TLDR: the end game is that these athletes aren’t going to get paid. It’ll come out that the money was never guaranteed to GST from investors and that GST made false claims and had athletes sign on under false pretense. Then the lawsuits will come in
-
260
-
theswooner wrote:
Jonathan Gault wrote:
"Once these funds are received on our end, we will work to immediately process them to your athletes, noting all banks have different timelines for receiving and depositing funds into individual accounts."
The second half of that sentence is so laughable that I can't take the rest of this statement seriously. They're really highlighting direct deposit processing rates when these payments are months overdue?
This is bad and only going to get worse. Remember, this is *Kingston* money. We're not even talking about Miami or Philadelphia yet. And once Worlds is over there is nothing on the calendar to distract everyone's attention. Things are about to get ugly.
Kingston? KINGSTON?! We at Nationals and y’all talking about KINGSTON? Kingston?
165 -
lawsuits don't matter. if there's no money, nobody's getting paid.
160 -
high school xc coach wrote:
lawsuits don't matter. if there's no money, nobody's getting paid.
at least it will stop grand scam from holding a 2nd scam. Without the lawsuits, Grand Scam could force the athletes to fulfill "contractual obligations" for year 2 or even sue the athletes if they don't.
97 -
Investor\'s perspective wrote:
Here's the thing about this "potential investment." It's not just that an investor needs to provide $3M or even $13M. For this to be viable, GST at this point needs enough cash to pay ALL the costs associated with Year 1, on-going operating costs, PLUS all the costs for Year 2 because everyone is going to want their money upfront. Even if they lower payouts a little and cut some costs, this has got to be in the neighborhood of a $50M ask.
I just don't see how ANY investor would see that as a good investment. Given the risk profile you'd have to believe that GST could turn into AT LEAST a $250M business given typical investor metrics and I just don't see the revenue potential here that would support that. Investments in sports are hot right now in the investor community but this one would be a real stretch.
In my opinion, the best hope for the athletes is that existing investors see enough reputational risk in not paying athletes that they effectively fork over the money knowing that they aren't getting anything back. I've seen that happen, this isn't such a large amount of money that a big fund couldn't do that, but it won't be because GST has a sustainable future.
I also wonder if a potential investor would be concerned about a lack of control. Obviously having MJ front and center and constantly flaunting prize money didn't move the needle but they're both huge parts of the gst brand. I would be concerned about MJ and GST's inability to reinvent themselves for year 2.
50 -
Investors Perspective 2 wrote:
Investor\'s perspective wrote:
Here's the thing about this "potential investment." It's not just that an investor needs to provide $3M or even $13M. For this to be viable, GST at this point needs enough cash to pay ALL the costs associated with Year 1, on-going operating costs, PLUS all the costs for Year 2 because everyone is going to want their money upfront. Even if they lower payouts a little and cut some costs, this has got to be in the neighborhood of a $50M ask.
I just don't see how ANY investor would see that as a good investment. Given the risk profile you'd have to believe that GST could turn into AT LEAST a $250M business given typical investor metrics and I just don't see the revenue potential here that would support that. Investments in sports are hot right now in the investor community but this one would be a real stretch.
In my opinion, the best hope for the athletes is that existing investors see enough reputational risk in not paying athletes that they effectively fork over the money knowing that they aren't getting anything back. I've seen that happen, this isn't such a large amount of money that a big fund couldn't do that, but it won't be because GST has a sustainable future.
I also wonder if a potential investor would be concerned about a lack of control. Obviously having MJ front and center and constantly flaunting prize money didn't move the needle but they're both huge parts of the gst brand. I would be concerned about MJ and GST's inability to reinvent themselves for year 2.
If everybody gets paid MJ will go from zero to hero. No athlete will give a crap when the money is in their account and there will be double the applicants for year 2.
However, that's all just pipe dreams unless some miracle investor comes along....
101 -
Investors Perspective 2 wrote:
I also wonder if a potential investor would be concerned about a lack of control. .
"Lack of control"? That's not the big problem here. The problem is that Grand Slam Track is a money pit and an intelligent potential investor will realize they won't get their money back.
51 -
Kvothe wrote:
high school xc coach wrote:
lawsuits don't matter. if there's no money, nobody's getting paid.
at least it will stop grand scam from holding a 2nd scam. Without the lawsuits, Grand Scam could force the athletes to fulfill "contractual obligations" for year 2 or even sue the athletes if they don't.
Won't happen. If no one gets paid this year, next year no facility would rent Grand Slam Track their track for a meet.
170 -
MJ is looking for a rich stupid person wrote:
Investors Perspective 2 wrote:
I also wonder if a potential investor would be concerned about a lack of control. .
"Lack of control"? That's not the big problem here. The problem is that Grand Slam Track is a money pit and an intelligent potential investor will realize they won't get their money back.
There is no way that any of the people who initially invested or are investors in any of the other track startups think that they're going to make hundreds of millions. I'm talking about someone like Alexis Ohanian who has the money to easily get them back on their feet. If I were him, I would be worried that my donation would be squandered in year 2.
10 -
Investor's perspective wrote:
In my opinion, the best hope for the athletes is that existing investors see enough reputational risk in not paying athletes that they effectively fork over the money knowing that they aren't getting anything back. I've seen that happen, this isn't such a large amount of money that a big fund couldn't do that, but it won't be because GST has a sustainable future.
I get that reputational risk is a thing. However, how much of a risk is there really in this case? Does some investment fund really care about what a handful of track nerds think about them? The reputation they care about is their reputation among the investment banking community, which -- if they're aware of this debacle at all -- likely agrees that it's a complete loser of an investment that no serious investor should touch with a 39.5 foot pole.
60 -
high school xc coach wrote:
lawsuits don't matter. if there's no money, nobody's getting paid.
Any lawsuits would accuse MJ and potentially others of fraud and therefore personal liability, although the corporate veil is often difficult to pierce. Might take a talented legal team to get anywhere.
On the other hand, Nike could swoop in (or perhaps swoosh in) by becoming a major sponsor and get credit for saving the day with everyone getting paid and their name all over the meets next year. It would be a minor investment for them. This would be more likely to happen if most of the athletes were Nike sponsored. I haven't looked closely but I think it's roughly 50% Nike athletes, at best.
90 -
Investors Perspective 2 wrote:
MJ is looking for a rich stupid person wrote:
"Lack of control"? That's not the big problem here. The problem is that Grand Slam Track is a money pit and an intelligent potential investor will realize they won't get their money back.
There is no way that any of the people who initially invested or are investors in any of the other track startups think that they're going to make hundreds of millions. I'm talking about someone like Alexis Ohanian who has the money to easily get them back on their feet. If I were him, I would be worried that my donation would be squandered in year 2.
Well any prospective investor would probably take over the business ownership entirely. MJ would just be kept on as a front-man going forward.
He is probably that desperate right now he would agree to such a thing.
80 -
Are we just gonna forget that MJ just bought a new house and Bentley
142 -
Schrauf wrote:
high school xc coach wrote:
lawsuits don't matter. if there's no money, nobody's getting paid.
Any lawsuits would accuse MJ and potentially others of fraud and therefore personal liability, although the corporate veil is often difficult to pierce. Might take a talented legal team to get anywhere.
On the other hand, Nike could swoop in (or perhaps swoosh in) by becoming a major sponsor and get credit for saving the day with everyone getting paid and their name all over the meets next year. It would be a minor investment for them. This would be more likely to happen if most of the athletes were Nike sponsored. I haven't looked closely but I think it's roughly 50% Nike athletes, at best.
Nike - that's a great suggestion. They could insist that their athletes are the "Racers" and who cares about whom the challengers are sponsored by.
$30 million a year is nothing to them. They would also be aware if such a thing can be profitable or not.
80 -
mikehammer wrote:
What investor would plug this Year 1 hole ?
An investor who believes in the dream and is willing to assume debt? Happens every day in sale/purchase transactions.
03 -
Jonathan Gault wrote:
Grand Slam Track had told athletes and agents that it would pay out prize money for its Kingston meet by the end of July. But GST has missed that deadline. It sent out an email to agents on Thursday evening saying that it expects to have investor funds "imminently" and would work to process those funds to the athletes once GST has them.
Here's the relevant text of the email sent to the agents:
"Grand Slam Track is anticipating investor funds to hit our account imminently, and the athletes are our top priority. Once these funds are received on our end, we will work to immediately process them to your athletes, noting all banks have different timelines for receiving and depositing funds into individual accounts.
"We are in the process of recapitalizing the company, and we are committed to distributing funds to athletes as soon as we receive them. As we continue to receive funds in the upcoming months, we will distribute payments as they come in. We will continue making progress toward completing your full payments at the earliest date possible."
Will be interesting to see what happens next. Grant Fisher, who is owed $100,000 from Kingston alone, said he expected athletes would be upset if they weren't paid by July 31. The problem is, if GST doesn't have the money, the athletes don't have a ton of recourse if they want to get paid. Lawsuit or not, the athletes are only getting paid if GST gets the money at some point.
Front Office Sports has more:
Least surprising news of all time. MJ should go to jail
13 -
Jonathan Gault wrote:
Grand Slam Track had told athletes and agents that it would pay out prize money for its Kingston meet by the end of July. But GST has missed that deadline. It sent out an email to agents on Thursday evening saying that it expects to have investor funds "imminently" and would work to process those funds to the athletes once GST has them.
Here's the relevant text of the email sent to the agents:
"Grand Slam Track is anticipating investor funds to hit our account imminently, and the athletes are our top priority. Once these funds are received on our end, we will work to immediately process them to your athletes, noting all banks have different timelines for receiving and depositing funds into individual accounts.
"We are in the process of recapitalizing the company, and we are committed to distributing funds to athletes as soon as we receive them. As we continue to receive funds in the upcoming months, we will distribute payments as they come in. We will continue making progress toward completing your full payments at the earliest date possible."
Will be interesting to see what happens next. Grant Fisher, who is owed $100,000 from Kingston alone, said he expected athletes would be upset if they weren't paid by July 31. The problem is, if GST doesn't have the money, the athletes don't have a ton of recourse if they want to get paid. Lawsuit or not, the athletes are only getting paid if GST gets the money at some point.
Front Office Sports has more:
In the other thread I thought maybe Grant and other unpaid athletes could collect a settlement now and avoid getting almost nothing if (when?) GST files for bankruptcy. It would be helpful to know in which state(s) GST is a registered business entity and who the officers/directors/partners etc. are, other than MJ. Sometimes it’s possible to “pierce the corporate veil” and hold individuals liable.
10 -
Roger meyers wrote:
Nike - that's a great suggestion. They could insist that their athletes are the "Racers" and who cares about whom the challengers are sponsored by.
$30 million a year is nothing to them. They would also be aware if such a thing can be profitable or not.
Organizations to whom “$30 million a year is nothing” don’t blow $30 million a year on terrible investments. It’s one of the reasons they’re so wealthy in the first place.
300 -
GRAND SCAM TRACK strikes again!
00 -
Not sure why nobody understands the simple structure that I am pretty sure GST set up with the investor base. These are Capital Call structures. The managing company (GST)has the right to call capital from a group of Limited Partners (LPs). This allows companies to run businesses and call capital when needed. This structure lowers the cost of capital for the managing company as they may not draw on the capital (funded) if the business is running well (think ticket sales). If they need capital they “call” the capital which has certain time windows - usually 90 days. In exchange for this option, the structure gives the LPs leverage. If the structure is well documented - it is a very strong set-up. MJ gave a bad explanation when he said the investor was using market volatility to invest in other assets. Of course, the cash was invested elsewhere. That’s the beauty of leverage. The investor is investing at both.
Here is the key point. Cap calls are not liquidity facility since it takes certain time to call the cash. That’s where banks come in- they lend against these structures - so if real cash flow is needed - they will bridge that gap until the LPs pony up. It’s clear GST didn’t understand this or thought their downside business model would not hit such a low ebb of cash. So for me - either this is a timing issue or the LPs have much better lawyers than GST and they had an option to bail. If you are GST and you let the documentation give that sort of option - you are a very crappy business person.51
What People Are Talking About On LetsRun
No top threads at the moment. Check back soon.