The future of the famed Mavericks surf competition is continuing to roll over rocky waters after Cartel Management canceled plans to auction off its assets this week.
Cartel and Titans of Mavericks are in the midst of federal bankruptcy proceedings, which have thrown the local big wave event into turmoil. The companies were slated to hold an auction June 1 in a proposal that sparked dispute from local Mavericks organizers and the San Mateo County Harbor District.
Just hours before the auction was slated to take place in a Los Angeles attorneys’ office, Cartel called it off. Only four parties showed an interest in placing a bid, and none met Cartel’s qualifications that included a minimum $1 million offer, according to court filings.
Instead, “one of the parties has proposed an alternative transaction involving a potential recapitalization” of Titans, according to the filing. That means in lieu of auctioning off its assets — which many speculate included a coveted five-year permit from the Harbor District — they will work with the unnamed party to negotiate an alternative arrangement, according to the filing. Without disclosing names, Cartel’s CEO Griffin Guess noted in an affidavit he’s contacted hundreds of parties including high net-worth individuals, media companies, sports leagues, internet companies and product corporations. Although 14 entities gained access to Cartel’s “data room” which outlined what was for sale, only a small handful offered a bid. One unnamed entity even cited the “cloud” of uncertainty in having to deal with local organizers, as reason to not bid, according to the filing.
Cartel, which rebranded the contest at Titans of Mavericks, hosted just one event before filing bankruptcy citing a multi-million dollar debt to various creditors.
The contest attracts international attention as 24 of the world’s bravest big-wave surfers rush to the San Mateo County coastline to compete on Mother Nature’s stage. While the event hinges on volatile conditions like wind, monstrous 30-foot waves and weather aligning; the biggest hurdle could be for it to clear out of bankruptcy court in time for the winter season.
“Ownership” of the event first started by Jeff Clark has also been called into question, with local organizers contending the Harbor District permit should belong to them. Although hosting the contest requires a litany of regulatory approvals, for the first time two years ago the Harbor District issued multi-year permit through 2021.
The district and Cartel have been debating whether the coveted permit is “transferable” without the local board’s approval.
In calling off the auction, Cartel used the opportunity to allege two parties had interfered and potentially reduced the value of their assets as the bankruptcy case unfolded in the media.
Cartel pointed to Mavericks Invitational Inc. — which includes Clark and has run the event in years past before partnering with Cartel — as well as the Harbor District and specifically Commissioner Sabrina Brennan.
“I think they’re playing the blame game and this is probably embarrassing for them, that they didn’t have a bunch of people lining up to fork over $1 million and they’re blaming people for it,” Brennan said.
Ultimately, Brennan said she just wants to see a suitable group run Mavericks, particularly as for the first time women must be included in the contest.
“Obviously I’m very concerned about the future of the event,” she said.
Time is ticking if surf enthusiasts, loyal fans and the big wave community at large are entertained with an event in this year’s 2017-18 season.
The event has been held just once since Cartel and local Mavericks organizers opted to work together in 2015. Despite favorable conditions, an event was never called last year and into the end of the season when fans found out why.
Cartel and Titans filed for Chapter 11 Bankruptcy earlier this year citing, in part, the costs and politics behind having to secure permits for the event.
There have been various battles to manage Mavericks over the years since Clark first kicked off an event in 1999. Recently, lawsuits and well as orders to keep quiet have flown back and forth between Cartel, locals and prior sponsors.
The requirements for hosting events have also changed over the years and it wasn’t until recently that the California Coastal Commission also got involved. Permits from various agencies like the Coastal Commission, approval from the local Sheriff’s Office and others is required for the event that typically requires closing public access to the beach and bluffs due to safety concerns. Hosting a contest requires advanced planning with the five-month window during which the contest can be held typically opening around November.
As the district’s five-year permit lasts through 2021 and already one season has gone by without an event, this particular asset could be losing value over time.
In its filing, Cartel doesn’t provide a timeline as to when it may present sale or acquisition options for the court to consider. Instead, it notes Titans and Cartel will continue to negotiate with the unnamed group to preserve the existing brands while also considering other offers potential buyers may present. It could also opt to try the auction route again.
The district opposed the assertion that its permit was transferable without the board’s approval. However, if a new leader comes on board to recapitalize but maintain the Titans brand, Cartel suggests the district’s objection would be moot.
The Harbor District Board of Commissioners is slated to meet in closed session Monday to discuss the issue, which is currently under the jurisdiction of a federal bankruptcy judge. Board Vice President Virginia Chang-Kiraly said whoever seeks to run the contest will still have to work with the district and adhere to its interests.
“For the Harbor District, it’s always going to be about how the community is going to benefit,” Chang-Kiraly said. “We have to move forward as things progress and evolve, but our stance is this is a public event and we’re going to have the best interests of the public at heart every time.”
(650) 344-5200 ext. 106