The Houston Rockets are escalating their efforts to unearth the true financial picture of Rokit, the NBA franchise’s sponsor-turned-debtor, after what the team alleges are Rokit’s efforts to muddy the waters in bankruptcy court.
Last week, lawyers for the NBA team’s parent, Rocket Ball Ltd., filed a blistering motion accusing Rokit, whose products range from liquor to mobile phones, of various acts of obfuscation and foot-dragging. The team’s lawyers are hoping to establish how the money flows within the Rokit “Group of Companies” and possibly pierce the corporate veil that has frustrated many of its one-time partners and employees. On Monday, a judge overseeing the case of Able Events—a Rokit subsidiary, previously known as Rokit Marketing Inc., that partnered with the Rockets on its inaugural jersey-patch deal—ordered the debtor to produce all of the documents that were requested by Feb. 17.
The ruling, confined to document production, is but one small fight in a multi-jurisdictional war to claw back money from Rokit, the mysterious and controversial venture capital enterprise that has left many sports companies feeling burned.
At issue is the relationship between Rokit’s global businesses and a handful of now-bankrupt marketing affiliates that entered into tens of millions of dollars’ worth of partnerships across the sports world, with entities like the Rockets, F1’s Williams Racing, and the NFL’s Las Vegas Raiders and San Diego Chargers. Rokit claims its defaulted subsidiaries have zero or de minimis assets, and are therefore unable to pay their creditors.
Lawyers for the Rockets, however, contend the marketing companies are inextricably linked to the wider Rokit enterprise, which purports to still be operating as normal, and that other Rokit entities or the company’s owners should therefore be forced to make the court-ordered payments to the NBA team.
Last week’s filing focused on what it portrayed as revealing testimony Rokit CEO Jonathan Kendrick gave in a meeting of Able Events’ creditors last spring when he was interrogated about the relationship between Rokit’s global enterprise and its purportedly bankrupt marketing offshoots. Separately, the team says it “personally observed” Rokit World Inc. paying Able Events’ bills out of the parent company’s account and that it has obtained bank statements indicating “payments to other sponsored entities were made from both accounts.”
Able Events was founded in 2018, the same year that Rokit signed a four-year, $40 million-plus marketing deal to be the Rockets’ jersey patch sponsor. That high-profile partnership was instrumental in Rokit subsequently signing deals with the Chargers and Raiders, which have also since become creditors.
Able Events’ bankruptcy petition, signed by Kendrick, followed unfavorable arbitration rulings ordering his companies to pay millions of dollars to Rocket Ball Ltd. and Williams Grand Prix for sponsorship deals that went south. The award for the former was affirmed in January of 2021 by a Texas state court judge, who also tacked on attorneys’ fees, while a federal judge in California confirmed the arbitral ruling for Williams this past December.
So far, neither creditor has been able to collect, as Rokit has used the bankruptcy process to put a liability wall between the specific named parties to those sponsorship agreements—Able Events and Combine Enterprises, formerly known as ROK Marketing LLC—and the pockets of Kendrick and Rokit’s biggest financial backer, billionaire John Paul DeJoria, who previously co-founded Patrón Spirits Co. and John Paul Mitchell Systems.
Among other things, the documents sought by Rocket Ball indicate efforts to find out how much control DeJoria had over these Rokit subsidiaries, and whether he should be personally responsible for making good on their defaulted deals. DeJoria did not respond to a request for comment sent through Paul Mitchell’s PR department. Questions for Kendrick sent to Rokit’s PR contact weren’t returned, while a query sent to an email address he previously used bounced back.
The increasingly hostile Rokit-Rockets dispute has pitted DeJoria, who maintains a residence in Austin, Texas, against another Lone Star State billionaire—Tilman Fertitta, who owns both the Rockets and Landry’s restaurant empire.
After initiating their sponsorship agreement in late 2018, Rokit paid the Rockets an upfront fee of $9.75 million. The payments ceased, eventually leading the NBA club to sue for breach of contract—winning an $11.23 million arbitration award. Rokit later filed its own lawsuit claiming it was entitled to desert the jersey-patch deal because of alleged misrepresentations that had been made on a companion liquor distribution agreement with Landry’s.
As with any federal bankruptcy case, the Chapter 7 petition by Able Events—which followed those of four other Rokit entities in California—automatically stayed any pending state-based litigation until a bankruptcy judge allowed it to resume. The stay for Rocket Ball’s lawsuit was lifted on May 22, but the company has yet to start any new actions in Texas courts.
Instead, it has focused on pursuing documents and questions in the bankruptcy proceedings, where the court-appointed trustee, Peter Mastan, has repeatedly demonstrated skepticism about Kendrick’s answers to questions and Able Events’ position that it should be solely responsible for any of its unpaid debts. The entity changed its name from Rokit Marketing prior to filing for bankruptcy, with Kendrick later acknowledging that this was done to keep his brand’s name out of negative headlines.
“I just didn’t want it to reflect badly on all the other good things that we’re doing in the Rokit Group of Companies and the Rokit name to be damaged,” Kendrick said. “That’s all.”
When asked by Mastan on May 12 what Able Events specifically got out of deals to spend tens of millions to sponsor professional teams and sporting events—”That seems like a very one-way street,” the trustee commented—Kendrick explained that its purpose was to promote “the Rokit brand, not a specific company.”
Kendrick said the Rokit brand produced “many things,” ticking off a list that included phones, games, films, e-bikes and city-wide Wi-Fi network infrastructure. As Sportico previously reported, a number of these projects failed to materialize.
Able Events claimed on its initial Chapter 7 filing, called a Form 201, to have earned $5.75 million in operating business revenue in 2019, but nothing in 2020. Kendrick pinned its financial demise on the pandemic’s cancellation of sporting events and related manufacturing problems in China, even though Able Events didn’t itself produce any products.
After Mastan asked Kendrick for a list detailing all of the companies within the broader Rokit group, as well as what services or products they sold, David Neale, Able Events’ attorney, interjected to suggest that this might be an impossible task.
“I can try to get you something along the nature of a corporate org chart, but in terms of getting into what each of the companies does,” Neale said, “I think that would be probably an extremely lengthy document, and I’m not sure that such a document exists.”
Mastan retorted: “Well, here’s the problem: This company is spending tens of millions of dollars or entering into tens of millions of dollars of contracts to advertise for these other companies, and I don’t know what they do.”
Neale and another Rokit lawyer, Alex Merino, did not respond to an email requesting comment.
During the May 12 creditors’ meeting, Mastan asked Kendrick to explain how Able Events paid its bills, given its lack of revenue streams. At first, the Rokit CEO said the funding came “through loans from the shareholders.” Pressed further, Kendrick specified that the money was lent by “just two trustee founders.” He and DeJoria are the only founders of Rokit and DeJoria has provided many of the Rokit affiliates their capital via loans.
In its bankruptcy petition, Able Events listed Rokit World Inc. as its biggest creditor, with a $31.4 million debt claim.
Halley Josephs, an attorney representing the Rockets, asked Kendrick who owned the trademark to the Rokit name and logo that Able Events used in securing the jersey-patch deal; Kendrick said he was not aware. Over the last few years, records show that Kendrick has personally filed for a number of Rokit’s British trademarks, including those used commercially for telecommunications services and alcoholic beverages.
When Josephs asked Kendrick whether Able Events had the initial $9.7 million in its bank account when it signed the Rockets deal in 2018, Kendrick said the Rokit subsidiary “had access to” funds from Rokit World Inc. “We just draw it down,” he added.
Unlike with a discovery dispute among opposing parties in a civil lawsuit, the expectations for document production are different in a Chapter 7 case, where the debtor has voluntarily submitted for the court’s relief.
However, according to Rocket Ball’s latest bankruptcy motion, the process has been repeatedly stymied by Rokit and its attorneys.
“Debtor engaged in a game of whac-a-mole, pointing Movants to different lawyers representing ‘different’ Rokit entities, with each one pointing Movants to another lawyer to obtain the documents to which Movants are entitled,” Rocket Ball’s filing states.
The last creditors’ meeting was held in July, with 10 subsequent ones being postponed, as creditors wait for Able Events to produce documents.
On May 13, the day after the last creditors’ meeting was held, Rokit filed its federal lawsuit against Landry’s and Fertitta Inc., claiming that the Rockets’ sister and parent companies had fraudulently misled it about Texas’ beverage laws, which prohibit non-liquor companies from contracting over alcohol distribution. In September, the judge overseeing that case dismissed the suit’s negligent misrepresentation and Deceptive Trade Practices Act claims, but allowed Rokit to re-file other claims, which Rokit did in an amended complaint.
Despite its failed deals, bankruptcies and legal embroilments, Rokit has continued to notch smaller sports marketing agreements, which have resulted in a steady stream of positive-sounding press releases.
In November, Rokit was announced as the title sponsor of the BMW Motorrad Superbike World Championship Team. “Through its various commitments, Rokit has established itself as an important player in motorsport internationally,” BMW Motorrad Motorsport director Marc Bongers said in a statement at the time, hailing the multiyear arrangement. “Strong partners are an important pillar in the further development and success of our project.”
A spokesperson for BMW Motorsport told Sportico this week that it was aware of Rokit’s pending “cases,” but that it had “full confidence that all our partners will fully fulfill their obligations.”
