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SBD/Issue 211/FranchisesPrint All
Cuban Previously Bid
For Cubs During Team's Sale
Mavericks Owner Mark Cuban Friday confirmed that he is thinking about buying the MLB Rangers by either joining Chuck Greenberg and Nolan Ryan's group or "another as a major investor," according to Barry Shlachter of the FT. WORTH STAR-TELEGRAM. Cuban: "The economics have changed, which has gotten me interested. My lawyers are still going through everything, but the bigger point is that I now have an interest. As I learn more I will have a better understanding about how aggressively I will pursue the interest and whether or not I will actually make a bid come the first week of August or whenever the court sets the date for bids." Cuban added he thinks there is an "opportunity to organize a bid for the team." Cuban: "Or if it's feasible or possible -- and I don't know for sure if it is or isn't -- to work with Chuck and Nolan and their group. I'm not trying to push anyone off or out. I'm exploring." Cuban added that he would ask Greenberg and Ryan "to join the group he ends up in ... should the Greenberg-Ryan group fail to buy the team." Shlachter notes Cuban "declined to say if he would insist on becoming the lead owner." Cuban's "possible entry comes at a crucial time when major lenders are trying to block the scheduled" Aug. 4 bankruptcy court auction of the team "to make it easier to get bids higher than what Greenberg-Ryan are offering." A Friday filing indicated that U.S. Bankruptcy Court Judge Michael Lynn "will hold an emergency hearing Tuesday morning to hear complaints that new auction rules would skew bidding in favor of the Greenberg-Ryan group" (FT. WORTH STAR-TELEGRAM, 7/17). In Dallas, Eddie Sefko notes Cuban "went hard after the Chicago Cubs when they were for sale three years ago, but his bid, which was considered very competitive, was turned down." Cuban at the time said that he "could not envision owning any other baseball team" (DALLAS MORNING NEWS, 7/17).
CHASE FILES SUIT: JPMorgan Chase sued the Rangers Friday for transferring their ballpark lease on the eve of their May 24 bankruptcy filing. Judge Michael Lynn is set to hear arguments tomorrow on a motion by the aggrieved lenders to the team to cast aside the auction bidding procedures set by the court last week. How JPMorgan’s lawsuit will affect that debate is uncertain, though having an auction for the team when the fate of the ballpark lease is in question could prove tricky. The lenders have complained about what they called the “midnight transfers,” since the Rangers first filed for Chapter 11 bankruptcy in an effort to skirt creditors' objections to the sale to Greenberg and Ryan. What JPMorgan argues in the lawsuit filed in the same court is that the team transferred the lease from its ballpark subsidiary directly into the club. The lenders had an uncapped lien against the ballpark unit, but only a $75M one against the club. And according to the bank, the lenders would have had to consent to any change to the ballpark lease. At a June 1 hearing in the bankruptcy court, Rangers attorney Martin Sosland said the transfer had no economic affect. The lawsuit was filed in the U.S. Bankruptcy Court for the Northern District of Texas, the same venue of the bankruptcy. The Rangers' parent defaulted on its debt on March 31, 2009, and soon after put the club up for sale. Over lender objections, the club, with MLB, chose Greenberg and Ryan. JPMorgan’s suit is notable in that in the months after the January agreement with Greenberg, JPMorgan Chase had been the one lender seeking to push the deal through. The bank is a traditional lender to sports leagues, while many of the creditors are funds with few ties to sports. The split between JPMorgan Chase and the lenders was so pronounced that each hired separate counsel. JPMorgan tapped Latham & Watkins, the attorneys in this case, and what became known as the ad hoc group of first lien lenders hired Milbank Tweed (Daniel Kaplan, SportsBusiness Journal).
GETTING OFF TOO EASY: In Ft. Worth, Mitchell Schnurman wrote under the header, "Texas Rangers' Bankruptcy Needs To Be Done Right, Without Hicks' Side Deals." Rangers Owner Tom Hicks "tarnished the Rangers, embarrassed Major League Baseball and stiffed lenders" in his attempted sale of the team. But the Rangers' bankruptcy plan "would allow him to walk into the sunset with a coronation and golden parachute," which is "reason enough for Judge Lynn to order a do-over." In bankruptcy, it is a "travesty to see a rich guy cut side deals at the expense of creditors and then make a bunch of midnight maneuvers to protect himself." Schnurman: "Haven't we seen enough executives gamble with other people's money, bring down their companies ... and somehow maintain their status on Forbes' richest list?" (FT. WORTH STAR-TELEGRAM, 7/17).
FOCUS ON THE FIELD: In N.Y., Sandomir & Belson note few team sales have been "mired in as much financial turmoil as the Rangers." Rangers 1B Chris Davis said of the sale, "Whenever you sit down and really start thinking about it, you kind of lose sight of what you're supposed to be doing on the field." Rangers 2B Ian Kinsler added, "There's nothing I can do about it. We're just basically waiting for new ownership to take over so we know what our future holds" (N.Y. TIMES, 7/19).
Guber Hoping To Bring
A New Energy To Warriors
The purchase of the Warriors is a "significant investment" for Joseph Lacob and Peter Guber, neither of whom are billionaires, according to Marcus Thompson II of the OAKLAND TRIBUNE. But unlike outgoing Owner Chris Cohan, they "appear to have designs on direct involvement, contrary to the absenteeism that often marked the previous ownership." Guber said Friday, "We have an enormous investment. I have a partner that is very knowledgeable about the area, community, team, which gives me a benefit. That partnership allows us to bring a whole different set of skills on what needs to be worked on. We each bring benefits to the table." Thompson writes, "Already, a noticeable difference in ownership style has emerged. Teamwork." Guber, "like Lacob a day earlier," said that personnel decisions "won't be discussed publicly until the sale is approved by the league" (OAKLAND TRIBUNE, 7/17). Lacob said of Oracle CEO Larry Ellison, who many believed to be the front-runner to buy the team, "Like everyone else, we thought that if Larry really wanted this and it was in his heart, he would have it. I just think we had a gut instinct that it wasn't entirely clear how committed he would be to it. And as it went on, it came to a point where we realized we had a legitimate shot." Lacob is a Celtics investor, and in San Jose, Scott Duke Harris noted some suggest that Lacob's "intimate knowledge of professional basketball ... may have given him and Guber an advantage in structuring their deal." Lacob said that he "met Guber when both made unsuccessful attempts to acquire the A's" (SAN JOSE MERCURY NEWS, 7/17).
FANS NEED A GOOD EXPERIENCE: Guber said there is a "mission of winning and there is a mission of providing entertainment value to the fans experience, but the idea is there are a lot of people contributing to it. It's a collaborative experience to provide that benefit." Guber: "I have a very broad base of experience in new media … (and) all those experiences bear upon what you have to do today to provide a benefit to an audience. The audience here is in the stands and watching on the television and eating your concessions and buying your merchandise. So to have that varied experience of both being a creative entrepreneur, a producer, an executive is a robust set of assets to bring to the challenges in front of us. … You got to be competitive. But you are really in, in some real sense, you are in show business. It is not just show, it is not just business. It is called show business. It has got to be economically sound and creatively compelling. You got to bring that audience in more than every single week. That is an emotional, intellectual and physical challenge." He added, "You have to lead by example. Whatever your leadership skills are, you have to say, you have to be able to listen really. If you are going to tell the good story, you are going to have to be a good listener" (CSNBAYAREA.com, 7/17).
NEW OWNERS GET IT: In Oakland, Monte Poole wrote Lacob and Guber "will have to spend money to make money." He added, "The new owners seem to 'get it.' Lacob in particular, as a hoops junkie and Warriors season-ticket holder, can visualize the potential. He knows the NBA and acknowledges there is a lot of work to be done and that some of it will be costly." It is "imperative Lacob and Guber realize not only how to get butts into seats but also how to attract talent." If they "follow that blueprint," they will be "lavishly rewarded" (OAKLAND TRIBUNE, 7/18). Comcast SportsNet's Matt Steinmetz said of Guber, "He really seems to be a character: He's very gregarious, optimistic, chatty, out there. He said he prides himself on being accessible. I think, quite frankly, he sounds like everything Chris Cohan wasn't" ("Chronicle Live," Comacst SportsNet Bay Area, 7/16). In Oakland, Carl Steward wrote the "best possible combination is savvy AND money, and Lacob and Guber have both." Steward: "No Warriors fan should be upset with the ultimate victor" (OAKLAND TRIBUNE, 7/17).
Dedicated Fan Base A Likely Reason Warriors
Sold For NBA Record $450M
POTENTIAL GOLDMINE: In San Jose, Tim Kawakami noted the Warriors reportedly sold for an NBA-record $450M, and he wrote, "How could this possibly get into a bidding war and produce a record amount, when other NBA sales situations are dying to attract strong interest at all? It's because of the acknowledged value and passion of the Warriors' fans. ... As everybody in the league has known for years, the Warriors are a potential goldmine, if only somebody smart could ever end up running the place." The team's "big crowds helped Cohan sell, no question" (MERCURYNEWS.com, 7/17). Meanwhile, a SAN JOSE MERCURY NEWS editorial states San Jose Mayor Chuck Reed "should get on the phone today to call the team's new owners and invite them to move the Warriors to San Jose." Oakland "doesn't offer the same long-term potential of either San Jose or San Francisco" (SAN JOSE MERCURY NEWS, 7/19).
JOIN THE TEAM: In S.F., Henry Schulman reports Lacob and Guber continue to "talk to potential limited partners," including the MLB Giants. The Giants are "interested in an alliance that could range from simple sponsorship and marketing arrangements to a direct investment that would give the Giants a minority stake in the NBA franchise." Also on the table "might be a deal to build an arena for the Warriors on land just south of AT&T Park, although that was not thought to be a pressing topic in the talks" (S.F. CHRONICLE, 7/19).
RECORD PRICE SAYS NBA IS HEALTHY: In Toronto, Doug Smith wrote the NBA is "really going to have a hard time pleading its economic hardship argument" with the Warriors selling for $450M. The perception that things are "horribly broken in the NBA model is going to be hard to prove to the common folk given what's been going on this summer, capped by that extraordinary number the Warriors fetched Thursday" (THESTAR.com, 7/16). ESPN's John Saunders said "all indications are" the NBA is "heading toward a lockout next summer," and so if the NBA owners "are crying poor, why are they throwing around million of dollars like donuts?" Saunders: “The fact is, if there really is nothing left in the bank it's too late to lock the vault" ("The Sports Reporters," ESPN2, 7/18). Meanwhile, SI.com's Ian Thomsen wrote, "I hear predictions that as many as a dozen teams could be available for sale after the next CBA makes the NBA a more attractive business -- which is another way of saying that now is a good time to buy, before it becomes a seller's market after 2011" (SI.com, 7/16).
Hornets Refute Report That Shinn (l), Chouest (r)
Are Barely On Speaking Terms
The transfer of Hornets ownership from George Shinn to Minority Owner Gary Chouest "remains stalled" because the two sides are "$24 to $30 million apart in negotiations," according to sources cited by John Reid of the New Orleans TIMES-PICAYUNE. Sources said that Chouest's "unwillingness to agree to Shinn's estimated value of the team is why he is seeking outside investors." Chouest also is "leery about the potential for a lockout after next season." Hornets officials said that there is "no timetable when the deal might be finalized." Shinn's asking price for the franchise "remains unknown." Sources said that since "negotiations stalled several weeks ago, Shinn and Chouest barely are on speaking terms," though Hornets President Hugh Weber "denied the assertions Friday." Weber: "It's just a situation where timing and the work each of them are doing in their own businesses that it's just not a critical issue for them to hurry up and get things down. There is just nothing normal about a team transaction. Every one of them is different." Reid noted Chouest purchased a 25% stake in the team in '07. Sources close to Chouest claim that his stake "has increased to a 35-percent share, but the Hornets have not confirmed it" (New Orleans TIMES-PICAYUNE, 7/17).
SPUR OF THE MOMENT: ESPN.com's Marc Stein cited sources as indicating that Spurs VP/Basketball Operations Dell Demps has "emerged as the frontrunner" in the Hornets' "fast-moving search" for a new GM. The Hornets have "interviewed a number of candidates during the NBA's annual summer league in Las Vegas and expect to complete that process by the end of the weekend." Weber said that he "hopes to have the new GM in place within a week." Stein noted Demps is the "only candidate to date to have been summoned for multiple meetings with Hornets officials" (ESPN.com, 7/17).
Maloof Says His Family Is
Not Interested In Selling Kings
NBA Kings Owners the Maloofs, “frustrated by the hurdles they are facing in getting a publicly funded arena in a bankrupt state with a worsening economy, are exploring their options for moving the team,” according to sources cited by Frank Hughes of SI.com. Sources said that the team’s ownership about a month ago met with former Sonics Minority Owner and President Wally Walker, and they claimed that the Kings were “exploring whether Seattle was a viable option to which they could move their franchise.” The sources said that Kings co-Owner George Maloof "came away from the meeting in Seattle understanding that it would be as hard, if not more difficult, getting an arena built in Seattle as it is in Sacramento and quickly rejected the notion of moving there." Walker “confirmed the meeting but declined to give details, saying it was a private matter.” Maloof said that it was “only an exploratory meeting to discern exactly what the Sonics went through in their failed pursuit of an arena.” Maloof: “One of our minority partners asked us if we were ever in Seattle to meet with folks in Seattle to see what they went through. It had nothing to do with us moving the team.” Hughes noted two other options for the Kings to relocate to are Las Vegas, where the Maloofs own the Palms hotel and casino, and Anaheim, where the team could share Honda Center with the Ducks. Las Vegas is “less likely because, like Seattle and Sacramento, it also does not have an arena that creates enough revenue streams.” Maloof was asked why his family would not “move to another city like Kansas City,” which has the Sprint Center and is “waiting for a tenant.” He said, “We live in Southern California and Las Vegas. To fly to Kansas City is a little longer, a little further.” Maloof added, “We are not selling. … We believe in the league. We believe in David Stern” (SI.com, 7/16).
VEGAS, BABY! Denver Post columnist Woody Paige said there is no way the NBA “should go into Las Vegas.” Paige: “They won't be able to have the gambling on the NBA games. They have an issue about building an arena." ESPN.com’s Jackie MacMullen: "In light of the referee scandal with all of that, the NBA needs to stay from this for at least five years." But L.A. Times columnist Bill Plaschke said a team in Las Vegas is a "logical next step from the summer league to the All-Star Game.” Plaschke: “It's an entertainment town. It's time for a team" ("Around The Horn," ESPN2, 7/16).
While Gallacher Has Not Yet Reached A
Deal For Stars, It Might Be Coming Soon
An NHL source has refuted a report that WHL Portland Winter Hawks Owner Bill Gallacher has "agreed in principle to buy the Stars" for $225M, according to Mike Heika of the DALLAS MORNING NEWS. The source said there is "no truth" to The Hockey News report and the sale price listed in the story is "far too low." Heika noted while the report might "not be accurate today, it could be in the future." Gallacher, who founded Athabasca Oil Sands Corp., has been "confirmed as one of two Canadians interested in buying the team, with Vancouver businessman Tom Gaglardi the other," and "many are predicting" that Gallacher will indeed buy the Stars. Current Stars Owner Tom Hicks said, "We are working closely with the NHL to conclude a process on a timely basis" (DALLAS MORNING NEWS, 7/17). In the original report, THE HOCKEY NEWS' Ken Campbell reported Gallacher "heads up a group of investors that has reached an agreement in principle to buy" the Stars. The deal has "yet to be signed and either side could back out of it, but it appears the deal will get done soon." Campbell reported "one possible scenario has Dallas Mavericks owner Mark Cuban jumping back into the fray." Cuban reportedly was "turned off" by Hicks' $350M asking price, but "might be enticed by a much lower price." There is "no chance Gallacher, if he finalizes his purchase, will move the Stars to Portland, where he owns his junior team, or to a Canadian city" (THEHOCKEYNEWS.com, 7/16).
WHAT DOES THE FUTURE HOLD? The MORNING NEWS' Heika cited sources as saying that the deal between Gallacher and Hicks Sports Group is "not close to getting done." While some claim that the $225M price is too low, Heika wrote, "I'm still struggling to get my head around that one. Tampa Bay just sold for a reported price of $110 million in March. ... In Phoenix, I'm not sure they will even get $100 million for the Coyotes. So what makes the Stars somehow worth tons more?" The Stars are "expected to keep ticket prices low in an attempt to fill the building next season, and that will only mean that creating revenue will be tougher." Some sources believe that a "new television contract will be a boon, despite low ratings, because sports stations need the programming, so maybe that's a reason for the optimism in the price." HSG and the NHL "have learned a lot" from the holding group's ongoing sale of the MLB Rangers, which is "one reason they're trying to do this so quietly" (DALLASNEWS.com, 7/17).
TENNESSEE WALTZ: The GLOBE & MAIL's David Shoalts reported the Predators owners are "putting what they hope are the finishing touches on a move to buy" the 27% of the team formerly owned by William "Boots" Del Biaggio III that now is controlled by the U.S. Bankruptcy Court. The two "major concerns are that Del Biaggio guaranteed $40-million of a loan believed to be about $75-million from the merchant bank CIT Group and a buyout provision Del Biaggio received when he bought" the 27% share of the Predators. That provision "allows the holder of the shares to ask the other owners to buy him out" for $25M in Oct. '11, but if they "refuse, the owner of the shares can buy out the other owners for sole control of the team." The CIT Group loan is "up for renewal in early December, which could create problems for the Predators" (GLOBE & MAIL, 7/17).
Blue Jackets President Mike Priest indicated that the casino taxes that will flow to Columbus and Franklin County (OH) “would be the best fix for the hockey team's financial woes,” according to Encarnacion Pyle of the COLUMBUS DISPATCH. The Blue Jackets are “losing an estimated $12 million a year in operations.” An ’09 report “blamed the team’s arena deal -- the Blue Jackets pay $5 million annual rent and lose $4 million to run Nationwide Arena -- as the biggest factor in the poor finances.” Local leaders “have considered a number of possibilities, from using casino dollars to raising taxes on rental cars, hotel stays and alcoholic beverages.” Priest said that using casino taxes is the “most attractive idea so far because the city and county would not have to seek voter approval to use the tax money.” Priest: “It is the most viable solution, and it wouldn’t require any other money being used.” Pyle reported four casinos have been approved to be built in Ohio, but city and county officials said that it is “too early to say whether casino taxes will be the solution for the Blue Jackets.” The Blue Jackets have also “floated a plan for Franklin County to eventually buy the arena,” and the team’s owners “hope to have a solution in place by the end of the upcoming hockey season” (COLUMBUS DISPATCH, 7/17). In Columbus, Jeff Bell notes “no purchase price has been disclosed,” but a study prepared for the Columbus Chamber of Commerce last year said that Nationwide was “willing to sell the arena to the county for $55 million in 2009.” That is nearly $100M “less than Nationwide said it paid to build the arena” in ’00. But the company “sees a thriving arena as vital to protecting its huge investment in the surrounding neighborhood” (BUSINESS FIRST OF COLUMBUS, 7/16 issue).
Local Buyer Is Most Likely Option For
Pistons, But Uncertainty Is Still Prevalent
In Detroit, Bob Wojnowski noted last week's report linking the Pistons or "another unnamed team to a potential Las Vegas buyer ... actually gained traction until the Pistons shot it down," which "shows how tenuous their situation is." Wojnowski wrote, "I don't believe the Pistons are going anywhere, expect perhaps to downtown Detroit in a few years, to join the Red Wings. ... I also realize you can't rule anything out, not in this Michigan economy, not with the state of the NBA and a lockout looming in 2011." A local buyer is the "most likely option here, and any potential owner probably is watching the roster and the payroll," as is Owner Karen Davidson. But this is a "dangerous period for a respected franchise," as the Pistons are a "vitally important asset to this area and the NBA" (DETROIT NEWS, 7/17).
RALLYING CRY: In Ohio, Les Levine wrote Cavaliers Owner Dan Gilbert "has emerged from the rubble as the most popular owner in the history of Cleveland sports since Bill Veeck," and it is "not even close." While some national media members are "ripping Gilbert" for his open letter about LeBron James, it "played very well" in Ohio. There are "some fans who feel Gilbert has built up enough good will to be able to tear the team down and try to bring it back up again" (Lorain MORNING CALL, 7/18).
THE HEAT IS ON: In Miami, Michael Wallace wrote the "South Florida arrival of LeBron-mania not only lifts a teetering Heat franchise immediately into NBA championship contention, it also catapults Miami to among the more elite sports towns in the nation." Sports Business Group President David Carter "believes James' addition to the Heat will transition Miami from a casual 'event town' -- where big games draw large crowds but routine games are ignored -- into a sports-crazed metropolis." Carter said James "has a chance to elevate its reputation globally, as the NBA is certain to more prominently feature the team in years to come" (MIAMI HERALD, 7/18).
HOW TWEET IT IS: In L.A., David Wharton noted the Lakers "have made it their business to post regularly on Facebook and tweet on Twitter, attracting more than 3.6 million fans on those sites." The team earlier this month announced the signing of G Steve Blake on Facebook, and Lakers Senior VP/Business Operations Tim Harris said, "Now you're in this sort of dialogue where other people take hold. The masses might push your message in a different direction than you intended it to go" (L.A. TIMES, 7/18).