KAABOO co-founder Bryan Gordon might soon be facing his former business partner in court after a federal judge declined Thursday (Dec. 19) to dismiss a five-count lawsuit over Gordon’s role in the cancelation of a 2015 Arkansas country music festival.
Gordon is chairman of private venture fund Madison Companies and co-founder and former owner of the KAABOO festival near San Diego. The 58-year-old Denver businessman has been locked in a five-year legal battle with Kansas promoter Brett Mosiman of Pipeline Productions over the canceled Thunder on the Mountain music festival.
Mosiman accuses Gordon and his partners at Madison of reneging on a commitment to finance the Ozark mountains event, leading to state and federal class action lawsuits from consumers who bought tickets for the June 28 show that was to feature Carrie Underwood, Big and Rich and Zac Brown Band. Court documents in Arkansas show that consumers spent $960,000 on tickets and only about $360,000 was refunded through credit card chargebacks.
The lawsuit is one of five linked to Gordon’s previous ownership of KAABOO, which he sold in September (and is now suing the buyers). His battle with Mosiman predates the launch of KAABOO in 2015 and has dragged on for years, with 40 depositions recorded and 100,000 pages of document produced.
Mosiman had been a successful festival promoter when he first met Gordon and his partners Seth Wolkov and Rob Walker at Madison. After six months of negotiation, Gordon and Mosiman entered into a letter of intent for Madison to “purchase 51 percent of plaintiffs’ music festival business,” judge Kathryn H. Vratil wrote in her Dec. 20 ruling.
Unable to close the sale, Gordon and Mosiman eventually agreed on a smaller deal to co-produce Thunder on the Mountain. Eventually Gordon agreed to pay “$750,000 for a 51% interest in Thunder, fund $500,000 of operating capital for the festival, and pay Backwood/Pipeline $80,000 to produce and operate Thunder,” the judge writes.
Gordon ended up funding about half of Madison’s obligation, wiring $272,000 in artist deposits to performers and their agencies, according to Vratil. Mosiman was “able to forecast that like most new festivals, Thunder would operate at a loss in 2015,” Vratil writes. Gordon “became increasingly nervous” over the loss the first year festival would incur. On April 14, Gordon filed a lawsuit against Mosiman in Delaware, arguing that his investment was really a “line of credit” and demanded repayment of the $272,000.
The next day, Suzanne Land (listed as the s.v.p. of legal affairs at Madison on LinkedIn), notified Mosiman that Madison “would no longer participate in Thunder” and presented two options — “execute a fully-secured promissory note for an alleged loan that never existed (the $272,000 in artist deposits),” Vrati writes, “or face scorched-earth litigation from Gordon.”
Officials with Madison companies “also sent defamatory letters to artist agencies about their relationship with plaintiffs, knowing that the letters would substantially harm (Mosiman’s) reputation,” Vrati writes.
With a new round of artist payments due and Madison no longer funding the festival, Mosiman scrambled to find new investors but ultimately had to cancel the festival, incurring large losses multiple lawsuits.
“Moreover, in order to become judgment-proof, Gordon, Wolkov and Walker (the owners) transferred Madison/Horsepower’s music festival business to several other entities,” Vratil wrote, describing four separate transfers between holding companies Gordon and his partners controlled, including KAABOO LLC.
In her ruling Vratil allowed charges tied to the transfers to proceed and let stand Mosiman’s claims for breach of contract and fiduciary duty, fraud and tortious interference, paving the way for the case to go to trial on Feb. 3, 2020 in Kansas City, Kansas. If Mosiman ultimately prevails, he has agreed to allocate seven percent of any money he collects from Madison, capped at $1 million, to ticket buyers for Thunder on the Mountain.
Whether the Mosiman lawsuit goes to trial or is ultimately settled, Gordon’s legal fight is far from over. From its conceptual phase in 2014 to his sale of KAABOO to his former partner in September, Gordon has constantly been involved in litigation and even his partner, who paid $10 million for KAABOO to save the festival from being cancelled.
Gordon was also sued by BottleRock founder Robert Vogt, who said KAABOO was his idea and accused Gordon of breach of contract in San Diego court for terminating Vogt’s 5% equity position in the festival. Gordon had unsuccessfully tried to bid on BottleRock after Vogt and his partner lost $4.5 million on the venture in its first year and had to sell the event. After several months of discussions, Vogt alleges he told Gordon about his idea for a “BeachRock” festival at the Del Mar Fairgrounds and eventually Gordon’s Madison Companies signed a five-year lease for the space.
According to the civil complaint, Gordon allegedly started trying to push Vogt out of the festival in November 2014 and encouraged him to sell back his 5% stake in exchange for an “off the books” 2.5% promise of any net proceeds for future events. Vogt wrote in his complaint that he was allegedly told that he would receive “maybe a cash briefcase thrown in the trunk of your car,” but the festival wasn’t profitable in the first year and in 2016, Vogt said his efforts to review the books and collect his 2.5% were rejected by a KAABOO attorney.
Gordon’s company also filed suit against a former employee after he fired him in 2017. According to the suit, after being terminated, Gordon presented the executive with several documents, which they refused to sign. The executive’s lawyer claimed Gordon was allegedly attempting to “extract additional promises” the executive “was not required to make,” adding, “It is impossible for (the executive) to return information that is contained in his head.”
Gordon ended up settling that case, along with one filed by a former employee who alleged he was fired after contracting fatal liver cancer. After returning from a six-week break from surgery, the employee was called to an “urgent meeting” — he said he thought he was being invited to “a surprise party to welcome him back,” according to court documents.
Instead he was allegedly demoted and then terminated weeks later. The employee sued for discrimination and Gordan countersued, reporting the terminally ill employee to the police for theft (over a laptop the employee mailed back) and argued that the employee was terminated for missing sales goals. After a judge refused to toss the employee’s discrimination lawsuit against Gordon, the two sides sides settled.
Besides the two ongoing lawsuits, Gordon will also have to deal with creditors following the KAABOO sale. Billboard previously reported than in an Oct. 11 letter mailed to investors one month after the $10 million sale closed, Gordon and Wolkov detailed the $69 million debt and equity capitalization the festival brand carried prior to the sale. While a $1.8 million talent loan was paid off using proceeds of the sale, Gordon’s companies still owed $2.3 million for a senior loan, $3.9 million to an investment entity controlled by the family of Dallas Cowboys owner Jerry Jones and $1.1 million in debt to the festivals partners in the Cayman Islands. The documents also show that Gordon had raised $22.9 million from investors and carried $35 million in equity belonging to management.
“Unfortunately there were not any distributions to provide to investors as part of this transaction,” telling investors that all of the money raised from the $10 million sale had been spent saving the 2019 festival from cancellation.
“The company and its legal advisors are in the process of working with its creditors to attempt to restructure its obligations,” Gordon and Wolkov wrote, with the “ultimate objective to achieve future capital recovery for stakeholders. The company cannot predict, at this time, the outcome of such discussions,” or assure investors it will “meet its obligations” to “counterparties and creditors.”