Sunday, December 15, 2013

Comedian Danny Thomas’ Investment Group Fails in Bid to Buy Chicago White Sox

Epton v. CBC Corp., 48 Ill.App.2d 274, 197 N.E.2d 727 (Ill. App. 1 Dist., 1964)

What happened?
 

In early April 1961, the investment group with a controlling interest in the Chicago White Sox offered to sell its share to a consortium organized by Chicago attorney Bernard Epton that included well-known comedian Danny Thomas. The agreed upon sale price was $4.8 million (about $37.5 million today.)

The White Sox stock, comprising a 54% share, was owned by CBC Corporation, controlled by Bill Veeck, Hall of Famer Hank Greenberg and Arthur Allyn, Jr. The group had purchased this share on March 10, 1959 from White Sox founder Charles Comiskey’s daughter, Dorothy, for $2.7 million (about $21.8 million today.)

Upon the sale to CBC, the White Sox enjoyed immediate success and captured the 1959 American League pennant. After falling to the Los Angeles Dodgers in the World Series; however, the White Sox finished 10 games back in 1960. By early 1961, the Bill Veeck group saw an opportunity to make a quick, handsome profit and agreed to sell their 54% interest in the American Baseball League Club of Chicago to the Danny Thomas group.

On May 31, 1961, a handshake deal was made with the Thomas group having a one-week option for $1000 to purchase the shares of stock for the agreed upon price. At the conclusion of this meeting, Veeck reportedly told Epton, "O.K., Bernie, *** we have a deal. I am glad that it’s taken care of. I know you will do a good job." Greenburg and Allyn are also alleged to have shaken hands with Epton and congratulated him on the deal. The written option agreement had not been signed, however.


As agreed, plaintiff delivered the check for $1000 to the seller’s attorney on the morning of June 2, 1961. That afternoon, however, Epton visited Allyn’s office and was told that Greenberg was being difficult. Allyn assured Epton that they would get the option agreement signed so that the sale could be formally announced on June 5, 1961. For unknown reasons, however, Hank Greenberg was having second thoughts.

On June 3, 1961, Epton offered a certified check in the amount of $100,000 to show their group’s good faith and ability to perform. Veeck refused the check, telling Epton that it was not necessary.
Bernard Epton with Certified Check
On June 5, 1961, CBC returned the $1000 check that they had accepted but not deposited, informing the Thomas group that Greenberg was not willing to sign the option agreement and that the CBC group was not going to be able to sell the stock to them.

As a result of the deal having fallen through, Epton filed suit seeking that the court compel CBC to sell them the team under the terms of the option agreement or alternatively, award them damages in the amount of $700,000 (about $5.47 million today), claiming that the stock they agreed to purchase for $4.8 million was actually worth $5.5 million.

The option agreement at issue provided that the Thomas group was to give written notice of their intent to exercise the purchase option and deliver a check in the amount of $99,000 to CBC. The Thomas group had not done either but claimed that their oral notice was sufficient and that they had substantially complied by offering the $100,000 check that Bill Veeck said was not necessary.

So who won?

The court ruled in favor of the CBC group, refusing to force the sale or award any monetary damages to the Thomas group.

Why?

The court found that even though Epton was on notice that Greenberg was refusing to go along with the option, "plaintiff still did not give written notice or pay the required $99,000; rather, he insisted that defendants sign the option agreement, thereby evidencing his uncertainty as to whether there was in fact any binding agreement." Accordingly, the court affirmed the lower court’s dismissal of Epton’s lawsuit.

What happened after this lawsuit was decided?
 
Interestingly, the stock owned by Veeck and Greenberg was sold to Arthur Allyn, Jr. and his brother, John Allyn and they owned the team together until John bought out Arthur in 1969. In 1975 John Allyn sold the team back to Bill Veeck.

Bernard Epton served in the Illinois House of Representatives from 1969 through 1983. He was unsuccessful in his 1983 bid for mayor of Chicago, losing a close race to Harold Washington.

Danny Thomas founded the St. Jude Children's Research Hospital in 1962.  It may never be known if the White Sox deal falling through sped up his efforts to bring the children's hospital to fruition, but Danny Thomas' vision has certainly been responsible for saving the lives of thousands of children since its inception. 

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