Maccabi Tel Aviv Ownership Dispute Heads to Arbitration

A new phase in the control battle over the Maccabi Tel Aviv basketball club is set to begin next week with the official arbitration proceedings. At the heart of the dispute are the claims of Richard Deitz, who has petitioned the court for a temporary injunction to freeze all changes to the ownership structure until a resolution is reached. The judge has placed a hold on all transactions made to date, directing the parties to urgent arbitration.

The current ownership structure consists of the Recanati group (led by Udi and Shai) holding 58%, Richard Deitz with 17.5%, Shimon Mizrahi with 14.5% (via the Newco group), and Ben Ashkenazi with 10%.

Deitz, who owns his shares through VR Capital Group, alleges that the Recanati family and Mizrahi orchestrated a coordinated maneuver to bypass his right of first refusal, with the aim of bringing Jason Levin into the ownership. This follows the Recanati family exercising their right of first refusal to purchase the Federman family's 29% stake for $50 million, and then intending to sell those same shares to Levin.

Deitz and Mizrahi both exercised their right of first refusal on the Federman shares. Deitz is expected to request the arbitration nullify the transfer of 7.5% of the shares and the current distribution of the 29%. Recanati and Mizrahi are expected to argue they acted within the exceptions and rights granted to them in the shareholders' agreement.

Deitz claims Recanati and Mizrahi accelerated their efforts to bring in Levin once his intention to exercise his right of first refusal became clear. A September 4th board meeting proposed a deal to transfer 14% of Maccabi Tel Aviv shares to Levin, with 7.5% from the Recanati family and 6.5% from Mizrahi. Deitz contends a clause cited by Recanati and Mizrahi, which they claim allows limited share transfers without triggering the right of first refusal, actually permits only a combined 7.5% transfer, not individual transfers of that amount. Consequently, only 7.5% from Recanati was sold to Levin, with final approval pending a general assembly that was ultimately canceled. Recanati and Mizrahi then declared the board's approval sufficient for the automatic transfer of shares.

Deitz alleges this transfer was the basis for the next step: Mizrahi exercising his right of first refusal for 26% of the 29%, with the remaining 3% to be divided between Deitz and Levin. Deitz argues this was a tactic to grant Levin the status of a right of first refusal holder, effectively circumventing his own right and significantly reducing his stake to ensure Levin's entry into the ownership structure.