Sports Law | Mergers & Acquisitions | Business Litigation

Introduction: A Sale Going Sour

The $4.25 billion sale of the NBA’s Portland Trail Blazers is facing a legal challenge that could disrupt the high-profile transaction and shine a spotlight on the enforceability of exclusivity and confidentiality agreements in the context of sports franchise acquisitions.

On September 20, RAJ Sports Holding, LLC, a sports investment firm led by Alex Bhathal and Lisa Bhathal Merage, filed a lawsuit in Delaware Chancery Court seeking to block Andrew and Peggy Cherng—the billionaire founders of Panda Express—from acquiring an ownership stake in the Trail Blazers. The Cherngs are part of a consortium led by Tom Dundon, owner of the NHL’s Carolina Hurricanes, which recently signed an agreement with the Paul Allen estate to purchase the Blazers, pending NBA approval.

RAJ Sports alleges that the Cherngs violated a contractual exclusivity agreement that barred them from pursuing the franchise outside of RAJ’s bid. The complaint seeks a temporary restraining order (TRO) to prevent the Cherngs from proceeding with the investment and accuses them of “undermining the integrity of the competitive bidding process.”

The Deal and the Dispute

The Trail Blazers have been on the market for over a year, with the estate of the late Microsoft co-founder Paul Allen exploring potential buyers under pressure from the NBA and public scrutiny. RAJ Sports—owners of the Portland Thorns (NWSL) and the upcoming Portland Fire (WNBA)—emerged as a serious contender, reportedly conducting months of due diligence and assembling a bid that included the Cherngs as financial partners.

According to the lawsuit, RAJ and the Cherngs entered into a confidentiality and exclusivity agreement on July 24, 2025, under which the Cherngs allegedly agreed not to negotiate or invest in competing bids for the Blazers. RAJ claims it disclosed sensitive financial modeling, strategic plans, and deal terms in reliance on that agreement.

But on September 12, it was publicly announced that the Allen estate had selected a competing group led by Dundon—with the Cherngs named as minority investors. RAJ’s complaint argues this was a “blatant breach” of the July agreement and that the Cherngs used confidential information to reposition themselves with another bidder.

The lawsuit names the Cherng Family Trust, Andrew Cherng, Peggy Cherng, and an affiliated investment entity as defendants. Dundon and other members of the winning bid group are not currently named.

Legal Claims and Relief Sought

The RAJ lawsuit, filed in Delaware Chancery Court, advances several core legal theories:

• Breach of Contract: RAJ alleges the Cherngs violated the July exclusivity agreement by joining a rival bid and misusing confidential information.
• Tortious Interference: The claim suggests the Cherngs disrupted RAJ’s relationship with the Trail Blazers’ sellers.
• Unjust Enrichment: RAJ contends that the Cherngs wrongfully benefitted from confidential information provided during the bid process.

RAJ is not seeking to unwind the entire Blazers sale or to block Dundon’s group broadly—just to exclude the Cherngs from participating. It has asked the court to:

• Issue a temporary restraining order preventing the Cherngs from finalizing any investment or participating in the ownership group;
• Enjoin the Cherngs from using or disclosing confidential information obtained from RAJ;
• Potentially award damages or equitable relief.

Key Legal Issues

This dispute raises important questions about contract enforceability, fiduciary-like duties in investment negotiations, and the strategic risks of consortium bidding in major sports acquisitions.

1. Scope and Validity of Exclusivity Agreements

A central issue is whether the July 24 agreement between RAJ and the Cherngs is enforceable and sufficiently clear. Courts scrutinize exclusivity clauses closely, particularly where they limit future investment rights or involve informal arrangements. The defendants are likely to challenge the scope, duration, or enforceability of the agreement, perhaps arguing that it expired or lacked mutual obligation.

2. Use of Confidential Information

The complaint alleges that RAJ shared “nonpublic investment strategy and financial assumptions” with the Cherngs in confidence, and that this information was later used to align with Dundon’s group. If true, this could support a misappropriation theory, especially if the information gave Dundon’s bid an advantage.

However, proving causation—that the Cherngs’ use of RAJ’s material had a direct impact on the competing bid—may be difficult.

3. Likelihood of Irreparable Harm

To obtain a TRO, RAJ must show that monetary damages are inadequate and that it faces irreparable harm without immediate relief. In franchise bidding cases, courts may accept that the loss of a unique investment opportunity—especially in a capped-league like the NBA—cannot be cured with money alone.

However, the fact that the sale agreement is already executed may weigh against injunctive relief.

4. Impact on NBA Approval Process

Even if the Delaware court does not block the Cherngs, the NBA Board of Governors still has final say on all incoming investors. The league is known for rigorous vetting, and any pending litigation involving new owners—particularly relating to ethical or contractual breaches—could complicate or delay approval.

Whether the league will view this dispute as a private contractual matter or as grounds to question the Cherngs’ fitness to own an NBA team remains to be seen.

Strategic Implications

This case could set important precedent for future sports franchise sales. Increasingly, high-value teams are acquired by consortiums of wealthy investors rather than a single buyer. With multiple bids often courting overlapping financiers, confidentiality and exclusivity agreements are common—but rarely litigated.

If the court upholds RAJ’s position, the ruling could embolden losing bidders to take legal action when partners jump ship. If the Cherngs prevail, it may discourage the use of restrictive agreements unless they are ironclad and time-limited.

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What Comes Next

As of this writing:

• The Delaware Chancery Court has not yet ruled on RAJ’s motion for a TRO.
• The documents relating to the exclusivity agreement remain sealed.
• The NBA has not commented on whether the legal challenge will delay the closing.

The sale is expected to close by March 31, 2026, if approved by the NBA.

Whether the Cherngs remain part of the Blazers’ next ownership group may now depend as much on the courts as on the league.