Yahoo Sports reported on Wednesday that private equity billionaire Antony Ressler is leading a group which is finalizing a deal to purchase the Atlanta Hawks. The group is said to include former NBA player Grant Hill as well as Atlanta entrepreneur Jesse Itzler, according to Adrian Wojnarowski.
Current owner Bruce Levenson was forced to sell the Hawks after racially insensitive comments made by him and GM Danny Ferry surfaced back in September, 2014. Shortly thereafter, Ferry, who claims he was only repeating scouting reports and not expressing his own views, took an indefinite leave of absence--leaving CEO Steve Koonin to oversee team operations throughout the sale process.
Here is text from Wojnarowski's report.
Ressler's group will purchase the team from majority owner Bruce Levenson for a figure somewhere between $800-plus million and $900 million, sources told Yahoo Sports.
Former NBA All-Star Grant Hill and Atlanta entrepreneur Jesse Itzler will be investors in the group, sources said.
A Seller's Market
Jacob Rosen describes the NBA franchise marketplace as the proverbial Wild Wild West; everyone is trying to jump on board with the spiraling increases in franchise values. And Rosen is correct: Teams have skyrocketed in value thanks in large part to the $2.7 billion-per-season ($24 billion total) national TV deal between the NBA, ESPN /ABC and Time Warner (TNT) that will begin in 2016.
The average NBA franchise has an estimated current value of $1.1 billion, a figure that has grown 74% from last year's estimates--the largest year-over-year increase for any sport since Forbes began estimating North American franchise values in 1998. Last year only three teams were worth over a billion, whereas now there are 11.
This multi-billion dollar deal partially explains why the value of the Hawks, as well as every other NBA franchise, has increased dramatically in just one year. This chart illustrates how the value of NBA franchise has increased over the last five years.
The value of the Hawks increased by an additional $100 million (approximately) because of a local TV agreement between the franchise and SportSouth (a FOX Sports regional network) set to kick in next season, according to Forbes' Mike Ozanian. SportSouth will televise all 82 regular-season games that aren't covered by a national network (ESPN, ABC or TNT); three preseason games; select playoff games as well as 10 hours of 'Hawks-themed original programming' each season. SportSouth televised 77 of the Hawks' 82 regular-season game this season; did not show any preseason games; and is splitting playoff coverage with Fox Sports South.
What does this have to do with the Wolves?
Glen Taylor will have a better idea of what the Minnesota Timberwolves are worth once the sale of the Hawks is completed. This will at the very least yield an appropriate starting price when he decides to sell the Wolves--something that is expected to happen in the near future. Taylor is reportedly 'amenable to taking in more limited partners' but not interested in selling his team until the value of the Hawks is determined.
Last year, Forbes determined the Hawks were worth roughly $425 million, or $5 million less than the Wolves, which were valued at $430 million. Assuming Yahoo is correct in that the Hawks will be sold for somewhere between $800-plus and $900 million the team will have nearly doubled in value since last year. This increase can be attributed to the national TV deal between the NBA, ESPN/ABC and TNT, as well as the Hawks' agreement with local affiliate SportsSouth.
Like every other NBA franchise, the value of the Wolves has increased because of the national TV deal, but unlike the Hawks, there is no evidence indicating that Taylor's team will receive additional revenue from local TV affiliate Fox Sports North. (If there is anyone that can find a current agreement between the Wolves and FSNorth, I would greatly appreciate that information.)
The local TV agreement may explain why Forbes believes the Hawks ($825 mill.) became more valuable than the Wolves ($625 mill.) over the previous year, however; there are unquestionably many other variables involved in such projections.
When will Taylor try to sell the Wolves?
There are a few reasons why, in my estimation, Taylor probably isn't in much of a hurry to sell the Wolves.
For one, it doesn't appear franchises will be depreciating in value anytime soon as the aforementioned national TV deal will rake in roughly triple the TV revenue the NBA makes now. The Hawks are in line to be the first team sold since Microsoft CEO Steve Ballmer purchased the Los Angeles Clippers for a cool $2 billion, roughly 14 times franchise revenues, according to Forbes. Previous franchise sale prices generally landed between 3-5 times revenues with more more recent purchases, such as the Milwaukee Bucks, closer to 5 times annual revenues.
Secondly, Taylor has millions invested in undertakings that aren't completed yet: Target Center and Mayo Clinic Square. The latter, a privately funded, $50 million dollar project which upon completion will serve as a practice facility for the Wolves and Lynx, is expected to be finished by the end of this year. If he were to try and sell his team as early as this summer, I imagine Taylor would have a hard time passing off the $43 million that his teams owe towards renovations to the publically owned Target Center.
The value of the Wolves will ultimately change by the time Target Center is renovated and Mayo Clinic is built.
Perhaps Kevin Garnett's next contract will best indicate when Taylor intends to sell the Wolves. According to Charley Walters, this summer Garnett will sign a contract that will keep him in Minnesota for the next two years. 'During that period, Garnett and Wolves president-coach Flip Saunders are expected to try to form a group to buy the team from Glen Taylor.'
These two need more investors if they intend to buy the team from Taylor. Garnett has made more than $325 million in salaries throughout his NBA career while Saunders, a minority owner, has made an estimated $40 million in 17 seasons on the sideline as a NBA coach. That leaves them about $250 million short of what the Wolves are worth according to Forbes.
If Garnett agrees to a one year contract, or no deal at all, then maybe Taylor is closer to selling the Wolves than we might expect. Garnett, who turns 39 in May, doesn't need to make any decisions regarding his future until July 1. In the final press conference of the season Saunders dismissed any questions on this subject until that time.
Keep an eye on what happens with the Hawks after Leveson completes the sale.
Ressler, Hill and Itzler may create the template for how Saunders, Garnett and any third minority investor would distribute and manage the responsibilities of a NBA ownership group.
Will be interesting to watch this Hawks sale unfold. Ressler-Grant Hill pairing could be a good indicator of how KG would take over Wolves— Jon Krawczynski (@APkrawczynski) April 22, 2015