October 14, 2011 by BMXNEWS.COM Editors · Comments Off
As part of the ongoing saga in the unwinding of the NBL’s remaining assets, one of the big unanswered questions was “what’s going to happen to the 51% of GSX shares that the NBL owns/owned?”
GSX, as you probably know, is the for-profit corporation that Gary Aragon started, along with Johan Lindstrom and Tom Ritz (formerly of the UCI). The intended mission of GSX was/is to be the global promoter of the UCI BMX Supercross World Cup series, and other high-profile BMX Supercross events.
It was a bit of a rocky start, with the NBL “Nations Tour,” which GSX was contracted to run and promote, being scheduled, then canceled, bit-by-bit, by the NBL (the first event, in Primm, Nevada, being canceled less than two weeks prior to race day was an early indication of what was to come).
Meanwhile, the UCI World Cup series started off as scheduled, and the taint of the NBL’s myriad problems did not, from all appearances, seem to cross over into the important work Johan and team were doing, vis a vis Olympic qualifying and staging BMX events all over the world.
On January 21, BMX News carried an article that announced Sarasota, FL would host a World Cup event in September, just prior to the season finale in Chula Vista. Then, on July 13, News posted a story telling of the cancellation of the Sarasota event, leaving 2011 as a four-event series, including the Olympic Test Event in London in early August.
All the while, the NBL–who held the majority share of GSX stock–was sputtering, with management saying “nobody panic,” but then effectively saying “ok, run for the exits,” in Mid-May. The speculation was that the ABA might come in and take GSX under its roof, as it had with the NBL, forming USA BMX.
That ultimately did not happen for reasons neither side will discuss publicly.
Then, on August 10, the NBL Board resolved to dissolve itself, and hand the wind up of the corporation over to a court-appointed receiver. One effect this action had was to take the NBL’s affairs out of the private, “just-between-us” world of the BMX industry, and place the details of the case in the public record.
On September 16, the receiver filed his first report on the NBL case. One of the major tasks was to liquidate the “asset” of the GSX stock that was still on the NBL’s balance sheet. Any funds realized from such a sale would go in to the trust account (which had $251,580.93 in cash on deposit, as of the filing). The receiver will ultimately use these funds to pay court-approved expenses of the receivership…(which, we’ll venture to say, will eat up a large part of the $250k)…and also to pay out monies for claims by NBL creditors (tracks, teams, and riders who are owed money by the NBL, among them).
As to the GSX Stock, the report stated:
“The receiver believes that little or nothing can be obtained by selling it to the general public, but has an interested party with whom the Receiver is negotiating although it is expected that the stock will be sold for a nominal amount. The Receiver believes it is in the best interest of the receivership to make that sale in order to divest the receivership of the stock which otherwise has no value to creditors.”
Sometimes, in cases like this, a sealed-bid process among a small group of bidders, or a public auction is undertaken to dispose of corporate assets, in order to fetch the highest price for creditors by opening the bidding to many interested parties.
That said, in smaller cases like this one, it is not at all uncommon for the trustee or receiver to find any buyer willing to pony up cash money for a difficult-to-dispose-of asset. And 102 shares in a company with no physical assets is about as difficult as it gets.
On September 23, BMX News sent an email to the attorneys for the Receiver, asking if there would be “any kind of auction, sealed bid process or other means employed to get the most favorable return on these shares for creditors, if other suitors were interested in bidding?”
Attorney Nicholas Reeves of Strip, Hoppers, Leithart, McGrath & Terlecky Co. responded to our request on October 3, saying only that “we will be filing another receiver’s report in a week or so which will answer most of your questions.”
That second report was filed on October 4, and did, in fact answer the biggest question of all: WHO would be the new lead shareholder of Global SX Events, Inc.
The Receiver submitted an application to the court to approve the sale of the 102 shares of stock to StrateSphere, LLC. of Gahanna, OH. In fact, looking at the address for StrateSphere (1000 Creekside Parkway, Gahanna, OH) reminds us of another tenant who once had that address: the NBL, itself. StrateSphere appears to own the office suites company (C|Suites) that was the NBL’s landlord.
The StrateSphere website explains the company as using a “Capital business model (that) has been deployed since 1994, maintaining offices in the United States, Saudi Arabia, and India.”
StrateSphere is a decidedly-outside-the-industry company, and appears to have some solid experience in operating businesses with global scope and reach. That could net out to be quite positive, especially if the partners can leverage their business contacts in places like India and Saudi Arabia to bring additional sponsor-interest and funding to the SX side of the sport.
The two minority owners in GSX, Johan and Tom, both signed off on the sale of the stock to StrateSphere. The amount netted for creditors will be $5000.
It is unclear whether StrateSphere Managing Partner and CEO, Tariq Farwana would be stepping into the role of GSX chairman, once occupied by NBL President, Gary Aragon.
BMX News reached out to Johan to get his comment on the sale, and the go-forward plan for GSX, now that it has a new, seemingly-stable majority owner, but the inquiry has not yet been returned.
We’re sure that, if nothing else, it must feel good to have the NBL in the rearview–though, not officially yet, as the sale does not become final until it is approved by Judge John P. Bessey, who is presiding over the case.
We will bring you more on this story, if/when details become available.
June 8, 2011 by BMXNEWS.COM Editors · Comments Off
Johan Lindstrom has been a man in the background, making the proverbial trains run on time, in the BMX Supercross scene for many years. A few months back, he made the jump from working stiff at UCI to CEO of the newly-created Global SX Events, or GSX.
GSX announced, concurrent with its formation, that they would be acquiring the rights to promote the UCI BMX Supercross World Cup events, beginning with the 2011 season. This was a very important announcement, because the World Cup series is the gateway to the Olympic Games and, if that were not enough, carried a fair amount of prestige on its own.
With the UCI SX deal inked, the group came out of the gate strong, and soon announced GSX was to be the promoter for the NBL’s “NationsTour” — a five-city tour of events (later cut to three cities), which promised unprecedented payouts of $40,000 per event, with $8,000 to the winner of Elite Men.
Unfortunately, the NationsTour started to show cracks early in its trajectory. The first event in Primm, Nevada scheduled for March 12 was abruptly canceled two weeks before the event date (citing problems at the location and/or a disagreement with the landowner).
Then, last month, the NBL announced it was in financial distress, ultimately leading up to the announcement that an agreement had been reached to merge the NBL with the ABA to form USA BMX. With 51% of the shares in GSX owned by the NBL, and the Papendal World Cup event rapidly approaching, you can imagine that there were some serious questions as to whether the NBL’s collapse would also take down GSX, and with UCI SX series down with it.
NBL CEO Gary Aragon was the face of all of the above news. And then, two weeks ago, the Papendal World Cup event grabbed BMX headlines with an innovative-but-extreme track–a near-replica of the track being built in London for the next stop on the UCI BMX Supercross World Cup tour and, of course, the 2012 Summer Olympic Games.
We had been hoping to get Johan to join us on the Announcers Tower Podcast when he moved to Ohio from his UCI gig in Switzerland, in February. The stars never quite lined up, and the interview never happened.
Last week, Johan reached out to us saying that he could take some time for an interview to bring BMX News readers up to date on a variety of issues. From the current GSX situation vis a vis the NBL, BMX Supercross track design, the London Olympics, BMX Racing’s likely future in the Olympic Games, how BMX Racing might be affected by BMX Freestyle’s entry into the games, and much more. We enjoyed doing the interview, and wish to thank Johan for taking the time to join us. We also made him promise to come back on again after the London SX in August, so keep an eye out for that.
Technical Note: Not sure if it was our Skype or Johan’s phone, but there is some pretty severe digital distortion (at times making Johan sound like Max Headroom). Just know that we are aware of it, and tried to fix it twice while recording yesterday.
iPhone users: Use this direct-listen link