In the high-stakes world of professional sports ownership, the line between aggressive investment and reckless mismanagement can be perilously thin. For Mat Ishbia, the billionaire mortgage executive who purchased the Phoenix Suns in 2023, that line has become the front in a bitter legal war. A recent lawsuit filed by the team’s minority owners, Scott Seldin and Andy Kohlberg, has pulled back the curtain on a contentious dispute, accusing Ishbia of treating the franchise like his "personal piggy bank" and, most notably, of bungling a financial maneuver known as a capital call in an attempt to consolidate his power.

The lawsuit, filed in Delaware State Court, is the latest escalation in a conflict that began in August 2025. Seldin and Kohlberg, the only two minority partners who remained from the previous ownership regime, allege that Ishbia has engaged in a pattern of financial misconduct, self-dealing, and a breach of his duties to the company and its investors. At the heart of their most explosive claim is a capital call initiated on June 2, 2025.

Before diving into the specifics of the lawsuit, it's crucial to understand what a capital call is. In a privately-held company with multiple owners, like an NBA franchise, a capital call is a formal request for the owners (investors) to contribute additional money to the company. This is typically done to fund significant expenses, such as player acquisitions, facility upgrades, or to cover operating losses. Each owner is required to contribute their pro-rata share based on their ownership percentage.

These are governed by the company's operating agreement, which also outlines the penalties for failing to meet the call, which are often severe. A common penalty is "dilution," where the ownership stake of the defaulting partner is reduced, and the contributing partners can purchase the forfeited shares at a steep discount. In essence, it's a mechanism to ensure the business remains funded, but it can also be used strategically to pressure or squeeze out minority partners.

According to the lawsuit filed by Seldin and Kohlberg, this is precisely what Ishbia attempted to do. They claim Ishbia initiated the June 2nd capital call with a tight 10-day deadline, a move they believe was designed to pressure them into either selling their shares or failing to contribute, allowing Ishbia to dilute their stake.

However, the minority owners allege that Ishbia himself "blundered into the very trap he set." The lawsuit claims that Ishbia failed to fund his own portion of the capital call by the deadline he imposed. If true, this mistake would trigger the same penalty provisions against him. According to the team's operating agreement, Seldin and Kohlberg would then have the right to purchase the shares Ishbia failed to fund, potentially giving them a majority stake in the franchise. The filing dramatically states this failure, if discovered, "would wipe off his net worth and put his continued status as an NBA team owner and governor in jeopardy."

Beyond the capital call drama, the lawsuit paints a broader picture of alleged mismanagement. The minority owners accuse Ishbia of a series of conflicted transactions, including:

The suit argues that Ishbia's "win-at-all-costs" spending, on massive player contracts and luxury taxes, has turned a once-profitable team into a money-losing operation, with his co-owners forced to foot their share of the bill for what they deem his personal project.

Ishbia and his legal team have vehemently denied the allegations, dismissing the lawsuit as a "shameless shakedown." A spokesperson for Ishbia stated that he was transparent from day one about his intention to invest heavily in the teams to build a winning culture, a stark contrast to how the team was previously managed. He argues that Seldin and Kohlberg "are trying to freeload off the value Mat created" and "want to drag the organization backward."

Ishbia's camp contends that the minority owners were given the choice to either contribute alongside him or sell their stake at the team's $4 billion valuation. By staying, they implicitly agreed to his investment strategy. On a recent podcast appearance, Ishbia suggested the minority owners should be thanking him, claiming the team's value has soared since his purchase, and that they should simply sell their shares if they are unhappy.

This legal battle is more than a financial dispute; it is also a fundamental clash of philosophies over how a sports franchise should be run. Is it a business meant to generate profit for all investors, or is it the personal domain of a majority owner willing to burn cash in pursuit of a championship? As this case proceeds, it will serve as a critical test of the rights of minority owners and the fiduciary responsibilities of the billionaires at the top.