Tom Gores Reaches Agreement To Purchase Pistons, Palace Of Auburn Hills
Pistons Owner Karen Davidson and Platinum Equity Chair & CEO Tom Gores Friday confirmed that they "have signed an agreement" for Gores and Platinum Equity "to purchase the Palace Sports & Entertainment and its assets -- the Pistons, the Palace of Auburn Hills, DTE Energy Music Theatre and the operating rights to the Meadow Brook Music Festival," according to Vince Ellis of the DETROIT FREE PRESS. Terms of the deal were not announced. A source said that the agreement "places a so-called enterprise value of more than $400 million on the team, the Palace and DTE." But Gores "may pay closer to $300 million after backing out minority ownership interests, debt and other liabilities." The NBA BOG "still has to approve the agreement, and the deal is expected to close by the end of June." The NBA announced that Gores "will be introduced to the finance advisory committee Thursday at the owners meetings" in N.Y. (DETROIT FREE PRESS, 4/9). Sources said that Davidson "will retain an equity stake in the team and Palace Sports & Entertainment." But that stake "will decrease as Gores .... continues to pay for his increasing share of the franchise" (CRAINSDETROIT.com, 4/10). In Detroit, Tom Walsh reported Davidson "had earlier planned to hang onto 10%," but that number "has reportedly shrunk to the low single digits" (DETROIT FREE PRESS, 4/9). CRAIN'S DETROIT BUSINESS' Bill Shea wrote, "I'm guessing that the purchase price is somewhere about $400 million to $420 million. But the purchase agreement is expected to be complex and the final price could be quite different. How much [Gores] pays himself, and how much is leveraged or comes from his other holdings, remains to be seen." Meanwhile, Gores "has no immediate compelling reason to abandon the 22,076-seat Palace of Auburn Hills -- which carries no debt" (CRAINSDETROIT.com, 4/9).
LOOKING AHEAD: Palace Sports & Entertainment President & CEO Alan Ostfield, when asked "about a private equity firm's mission to buy companies and sell off pieces," said that "his staff's interaction with Gores and his staff gives him comfort that won't happen." As for Gores' potential involvement, Ostfield "didn't want to guess what will occur but said Gores' staff has said repeatedly Gores is heavily involved in his businesses." Ostfield added he believes Gores is "committed to this (Auburn Hills) community" (DETROIT FREE PRESS, 4/9). In Detroit, Krupa & Goodwill cited sources as saying that Gores' track record "may make him a good owner, as long as he is willing to spend." Some said that they "expect him to attempt to spend wisely, but not lavishly in some attempt for immediate success" (DETROIT NEWS, 4/9). SportsCorp President Marc Ganis: "I do not expect Gores to be the next Mark Cuban. Even though they are about the same age and have some similar interests and ways of investing, he has not indicated that he has a passion for the game, itself, that Cuban has. But he has a clearly stated passion for the community, and that is where I think his focus should be." Ganis added, "I do not expect him to spend an enormous amount of money, go over the salary cap and spend and spend to move immediately to a championship-caliber team. But I do expect him to spend wisely on players" (DETNEWS.com, 4/9). Ostfield said Gores is "competitive as heck and he wants to win." Ostfield: "He's buying a business that he knows, from a basketball perspective, is clearly on a downward cycle. I mean, that goes without saying. And obviously he knows that happens in professional sports" (DETROIT NEWS, 4/9).
DUMARS SAFE: ESPN N.Y.'s Rob Parker cited a source as saying that Pistons President of Basketball Operations Joe Dumars "will keep his gig -- even after the ownership change" (ESPNNY.com, 4/10). In Detroit, Bob Wojnowski wrote the Pistons "need a committed owner with dough, and also someone who lets the basketball people make basketball decisions." Dumars "has shown he can build a team," and "that's why Gores would be wise to let Dumars work through this before making any rash decision" (DETROIT NEWS, 4/9). Also in Detroit, Michael Rosenberg wrote of Gores, "Early signs are that he gets it. Gores has never been an attention-seeker. I expect him to announce soon that he will keep Joe Dumars. ... Gores is not going to fire people just because he didn't hire them. That gives you a hint that this is not entirely about his ego" (DETROIT FREE PRESS, 4/9).
CHANGING OF THE GUARD: In Detroit, Drew Sharp wrote, "Saying good-bye to Karen Davidson means saying good-bye to two years of instability. Davidson realized early that she lacked the drive and passion for running a professional sports franchise. ... Not everyone possesses the will for such an undertaking, and nobody should blame her for her actions. Now we have an owner who wants the job" (DETROIT FREE PRESS, 4/9). Also in Detroit, Mitch Albom wrote an open letter to Gores. Albom: "Sports teams are notoriously tough investments. Costs are uncertain. Fans are fickle. Players slump. Labor issues loom. And that's just the Pistons! ... If you let the fans get to know you, this can be a great town for an owner. If you show the fans you want to build a winner, you can be embraced" (DETROIT FREE PRESS, 4/10).