As hedge fund billionaires Wes Edens and Marc Lasry were buying the Milwaukee Bucks for $550 million in 2014, the new owners paid a visit to the team’s old practice facility on a rainy day.
It became painfully clear the rebuilding challenges that lay ahead.
“There were buckets on the court and this is an NBA team,” Lasry said. “I didn’t understand it. I’m thinking why would anyone want to come here … and that it is going to cost a lot of money to do all these things. It was let’s fix everything as fast as we can.”
Four years and millions in additional investments later, that leaky practice facility signifying the team’s state of disrepair is long gone. In its place is a state-of-the-art training center that sits next to the glimmering new $524 million Fiserv Forum. The projects are the culmination of the Bucks’ remarkable transformation that began first under Edens and Lasry and now includes Jamie Dinan and Mike Fascitelli, who joined the investment group a few months after the team changed hands.
Fueled by the new arena and a sophisticated data-driven business approach, the Bucks for the first time have sold more than 10,000 full season tickets this season, compared to about 2,000 in 2014. Sponsorship revenue is up by 114 percent since 2014 and overall revenue has climbed by double digits in each year under the new ownership.
Next year the team will enter into a new seven-year TV deal worth more than $200 million, sources said. Fox will pay the Bucks $26 million for their rights next year, up from a payout that was in the low $20 million range last season. With 4 percent annual escalators, the new contract averages around $30 million per year.
The team has about 300 employees, up from fewer than 100 in 2014, a time when the Bucks didn’t even have a human resources department. The team’s sleek main business office is now housed in a historic Schlitz Park building up the street from the arena. Previously, Bucks staffers worked in offices scattered in three different locations.
Bucks ownership group
Founder of MDF Capital; co-founder and managing partner of Imperial Cos.
Co-founder and co-CEO of Fortress Investment Group, which has approximately $41 billion of assets under management; founder of New Fortress Energy, a clean energy company; co-owner of Aston Villa FC
Chairman, CEO and co-founder of Avenue Capital Group, which manages assets of approximately $10 billion
Founder, chairman and co-CEO of York Capital Management, a hedge fund with $20 billion in assets under management
On the court, the product is greatly improved with MVP candidate and superstar Giannis Antetokounmpo leading the resurgence. The team aims to surpass last year’s edition, which finished the regular season 44-38 and made the playoffs but was eliminated in the first round.
Add it all up and the Bucks are now a rebuilt and relevant NBA franchise far removed from their also-ran status under previous owner Herb Kohl.
• • • •
The turnaround by the New York-based ownership group didn’t come easy or cheap. The group has poured millions of dollars into the franchise. And like the successful hedge fund operators they are, they expect results.
“The team was basically at the bottom of the league in almost every business metric and it was a race to the bottom,” Dinan said. “Today we are in the middle of the league. Maybe it’s hubris, but we thought we could do a better job not so much on the basketball side but on the business side. It was incumbent for us to put money into it.”
The owners also knew they needed to create a new business culture, one that was modeled after their other business interests. That meant measuring results in every facet of the operation with transparency and accountability built into the process.
“I’m relentless in the search for information,” Edens said. “Good information is underrated and good judgement is overrated. We want great information about every aspect of the business.”
The team has seven full-time employees plus an intern devoted to business and basketball analytics efforts. “It you can’t measure it, it’s not worth doing,” said Bucks President Peter Feigin.
For owners like Edens and Lasry who are used to running companies far bigger and complicated than an NBA team, the turnaround — at least on the business side — was relatively straightforward.
“Although it’s a prominent business, it’s actually a small company, especially in my world of private equity,” Edens said.
• • • •
The hard-charging Feigin was one of the ownership group’s first hires, tasked with running the Bucks’ day-to-day business operations. Lasry knew him from Feigin’s days working in New York as vice president of marketing for the Knicks. Feigin maintains homes in New York and Milwaukee, where his big personality has allowed him to make deep inroads into the Midwestern city.
Then they opened their new team headquarters, which is purposely modeled after a trading floor with open desks and few offices. They more than tripled the size of the staff and emphasized that the team’s small-market status would no longer be accepted as an impediment to growth. Many new jobs were added in creating a 75-member arena staff and the sales staff has grown from about 20 to 60 employees.
Ticket prices were slowly but steadily increased and the team stopped giving away free tickets. “That is never a good way to brand,” Lasry said.
Once a month, the Bucks hold an all-hands-on-deck staff meeting where goals are set and measured and where executives from various departments make presentations before the entire front office.
The team was also quick to embrace analytics and social media to help brand the franchise and sell tickets.
“They have leveraged social media to engage with fans and then create compelling ticket offers and they were among our first teams to connect on that platform,” said Chris Petersen, vice president within the NBA’s team marketing and business operations division who is assigned to the Bucks. “It starts with ownership on down. They collaborate very well across the organization and they are very technologically advanced.”
On the sponsorship side, the Bucks approached non-traditional categories to drive revenue, including the arena naming-rights deal with Fiserv, which is the financial services technology company’s first sports sponsorship.
Good information is underrated and good judgement is overrated. We want great information about every aspect of the business.
Other moves were made with the new arena in mind, including Lasry and Edens adding the deep-pocketed Dinan to the ownership group and Fascitelli, who also brings commercial real estate expertise to the team as it plows ahead on its 30-acre arena development project connected to the new arena. All four owners regularly attend games. Combined, they will cover 50 percent to 75 percent of the schedule.
Edens is the team’s governor and represents the group at league meetings, with Lasry, Dinan and Fascitelli included in all major issues on both the business and basketball sides of the business.
“We operate like a partnership,” Edens said. “We all live in New York and we are all friends. At times, we force ourselves to compromise.”
Edens said the group does not take a “My turn, your turn” approach in the boardroom. “It’s bad in basketball and, by the way, it’s bad in business,” he said.
As the Bucks begin their 2018-19 season with a new building and high hopes both on the floor and in the front office, the owners know that despite all the progress, their rebuilding efforts aren’t yet complete.
“What we’ve done on the business side and facilities side, I don’t think anyone thought it could be done faster,” Fascitelli said. “The expectations are high. We have done the easy stuff. Now we have to deliver.”