Nigel Eccles is the co-founder of daily fantasy sports (DFS) giant FanDuel, but didn’t receive a single penny when the company was sold to Paddy Power earlier this year. FanDuel’s $465 million valuation didn’t, according to Eccles, take into account the possibility of legal sports betting in America and that resulted in a lower value than what the once-struggling company is really worth.
Eccles is so sure of his argument here that he’s filed suit against his former company in an attempt to recover as much cash as he possibly can.
In Eccles mind, and in his lawsuit, he claims that FandDuel was deliberately undervalued to insure that he and the other co-founders, including his wife Leslie, would not receive hundreds of millions of dollars that were rightfully owed. His argument further claims that the deal was prematurely closed so that the company did not achieve certain benchmarks that would have put millions of dollars in his pocket.
As it played out, FanDuel’s sale was a huge boon to the investment companies that funded it, but because the company was valued under $558 million when it was sold, Eccles and other common shareholders, which include many FanDuel employees, did not get paid out the same way preferred share holders were paid. He further contends that FanDuel definitely would have met that standard if the possibility of
In his petition to a Scottish court, Eccles laid out his argument saying in statement reported on by Redcode.net:
The decision of the board (whose interests are aligned with preference shareholders), not to seek and act upon a new market valuation in the face of a material event, which is likely to have significantly increased the market valuation of FanDuel, is a breach of its fiduciary duties.
The irony of a Eccles claiming that sports betting adds value to the company he once swore up and down as not having anything to with sports betting is not lost on anyone who has followed FanDuel’s epic odyssey, but will not be considered by the courts.