The sale of Bruce Levenson’s controlling stake in the Atlanta Hawks is expected to draw a number of suitors despite the franchise’s financial struggles and the volatile circumstances driving the transaction.
Sources last week said that while the Hawks have a history of financial losses, the same forces that fueled the recent record-setting sales of the Milwaukee Bucks and the Los Angeles Clippers will drive a Hawks deal. Additionally, unlike the case for the Bucks and Clippers, buying control of the Hawks may not require a 100 percent purchase.
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Majority owner Bruce Levenson (right) is selling after a controversy involving himself and GM Danny Ferry (left).
Photo by: NBAE / GETTY IMAGES; AP IMAGES
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One source estimated that Levenson owns about 43 percent of the franchise, with Michael Gearon Jr. owning about a 40 percent stake. Other minority partners include Ed Peskowitz, Todd Foreman, Michael Gearon Sr., Rutherford Seydel and Beau Turner.
This past February, the ownership group — known collectively as Atlanta Spirit — added five more unidentified minority partners. Current Hawks Chief Executive Officer Steve Koonin holds a small stake in the franchise, as well.
The Hawks declined to comment on any issues related to the ownership sale after the NBA on Sept. 7 announced that Levenson would sell his controlling stake. That followed Levenson self-reporting to the league a racially charged email he wrote in 2012, which came to light after the team investigated racially insensitive comments made by Hawks general manager Danny Ferry in a phone call with team executives related to pursuing Luol Deng as a free agent.
It is expected that Levenson will hire an investment adviser to lead the sale of his controlling stake, but as of Wednesday, no adviser had been retained, a source said.
In February, Inner Circle Sports, headed by Rob Tilliss, represented the Hawks as they added minority partners. Tilliss would not comment on the current Hawks sale plans.
This is not the first time Hawks ownership has been in the headlines. In 2010, Gearon and Levenson settled a legal battle with former owner Steve Belkin over the purchase of his 30 percent stake of Atlanta Spirit. In 2011, a deal to sell the Hawks to California developer and pizza chain owner Alex Meruelo was terminated. Now, published reports suggest a rift between Gearon and Levenson over the handling of the Ferry issue, which may be leading to growing tension within the organization.
Despite all of that, demand for Levenson’s stake is expected to be strong.
“Atlanta is a very challenging market,” said the team’s former president, Bernie Mullin, who now runs The Aspire Group, an Atlanta-based sports consulting group. “It is a transplant market, but with the right owner with deep pockets, this could be a jewel of a franchise.”
The Hawks rank in the bottom five in the NBA in ticket sales, according to sources familiar with NBA team finances. The team averaged 14,340 fans a game last season (a playoff year), ranking ahead of only Philadelphia and Milwaukee in the 30-team NBA.
The team’s local television deal with Fox Sports South expires in the next year or two, according to an industry source. The team is negotiating a new deal expected to be worth $30 million annually, far above the average value of their current contracts.
The market for TV deals across sports is ripe. In Sacramento, for example, the Kings this summer signed a 20-year deal that will pay the team about $35 million a year.
That expectation of a lucrative new local TV deal adds to the draws of the Hawks franchise among prospective new owners.
Also attracting demand in Atlanta, and for any NBA franchise, is the expected revenue that would come from the league’s new TV deals. Sources have projected the value of those deals exceeding $2 billion per year on average, more than double the current contracts, which expire after the 2015-16 season.
The NBA’s developing international presence is also seen as a key piece of business that is attracting interest to ownership for the league’s franchises overall.
