Bob Sillerman’s new life as a talent manager was put on ice yesterday when his first major acquisition unraveled and he was sued on charges of fraud and breach of contract.
The Firm, the Los Angeles-based talent management company that watches over the careers of such music artists as the Backstreet Boys, Limp Bizkit, Michael Jackson and Korn, accused Sillerman and his right-hand man, Mike Ferrel, of duping the company into a merger agreement.
Sillerman, the former chairman of SFX, said in November he plans to begin building a new artist-management empire called FXM. The Firm was his first acquisition – “an ideal first step,” he said at the time, for his return to the talent management game.
But The Firm’s founders, Jeff Kwatinetz and Michael Green, now say they want no part of Sillerman’s grand scheme.
The music managers asked the court for unspecified damages allegedly caused by Sillerman’s inability to close the reported $200 million purchase of the Firm, the music industry trade publication Hitsdailydouble.com reported.
“Sillerman took The Firm’s business concept and misused his position as a director [on The Firm’s board] to effectively force The Firm to abandon its own plans and either proceed with the proposed merger with FXM or face having FXM as a formidable competitor,” the suit said.
Insiders say Sillerman was unable to come up with the money needed to finance the $200 million deal.
The New York City native – who pocketed some $250 million in the sale of his radio assets and another $212 million after selling his SFX Entertainment to Clear Channel Communications for a whopping $4 billion – couldn’t finalize the financing because investors were wary of a non-compete clause in the SFX-Clear Channel deal, one insider said.
The suit claims Sillerman – who, while heading SFX invested $25 million in The Firm for a 16 percent stake – was barred from increasing his stake in the company after the Clear Channel deal was completed. The non-compete clause legally prevented Sillerman from owning a majority of the company, The Firm said in the suit. The clause also prevented Sillerman from buying other management companies, the suit said.
At the time of Sillerman’s unveiling of FXM, it was reported that he had already held talks with other management outfits.
While Sillerman has yet to close any deals, it is likely future negotiations will go on hold while he confronts The Firm’s allegations.
Sillerman could not be reached for comment yesterday. The Firm did not return calls seeking comment.