Davis, Laettner Continue Moving Forward On Grizzlies Bid
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Some Questioning Whether Davis’
Bid For Grizzlies Is Too High |
Prospective Grizzlies Majority Owners Brian Davis and Christian Laettner, who have agreed to pay $252M for Michael Heisley’s 70% stake in the team, “expect to get financing in part” from CIT Group and count real estate investor Steve Sallion among their investors, according to Thompson & Forsyth of the WALL STREET JOURNAL. While Davis and Laettner “have resisted naming many of their partners,” Sallion is part of a group investing about $30M. Davis would have to personally invest $54M “in order to become managing partner under NBA rules.” Davis indicates he will do so, and Heisley “believes [Davis] will have the money.” But “league insiders wonder whether Mr. Davis’s bid is too high and overleveraged for a team that lost a reported $40[M] last year and has averaged a woeful 15,002 fans early this season.” The Memphis-based group that owns the other 30% of the franchise has until Friday to exercise its right to match Davis’ offer (WALL STREET JOURNAL, 11/27).
BUSINESS PLAN: In Memphis, Maki & Williams cited confidential information from the bid as showing that Davis and Laettner plan to sell approximately $170M worth of “ownership units” of their Grizzly Acquisition Holdings LLC to help finance the deal. Ownership units start at $2M and a $10M investment “buys representation on the advisory committee that will provide input on operations and strategic direction.” However, the bid information states that “‘ultimate discretion for most matters, including the budget,’ will rest with Davis and Laettner.” The documents indicate that the Grizzlies has loses of $29.7M in ’06 but “could be profitable by the end of the 2008-09 NBA season” under Davis and Laettner’s plan to cut player payroll by about 16% in ‘08 “while maintaining its playoff caliber performance and attendance base” (COMMERCIAL APPEAL, 11/23).
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