Ownership Talk

[thinktank]

A Rod when it comes to owning a sports franchise Is a broke peasant. Lore is more like a well to do peasant. They're probably among the poorest ownership groups in the NBA.

This couldn’t be more false.

[BlacJacMac]

OK Lore has some heavy hitters pitching in. What is the status on those guys in the purchase. Any chance they will take over and force Lore and A Rod into the background. Are Lore or Lore and A Rod calling the shots?

That’s not how it works. They own smaller pieces of the franchise, so the only way they could “take over” is if Lore or ARod sold them enough of their shares to make them the majority owner.

I'm trying to gain understanding of how it works. Bloomberg has a 100 Billion net worth, but since he owns a small share of the team what is his obligation to put any money into the day to day operations? Do you think you can explain it for me? Why did Lore and A Rod offer Bloomberg and Schmidt a portion of their really sweet investment rather than keeping it all to themselves? Were Bloomberg and Schmidt buying at the 1.5B price that Lore and A Rod got or were they buying at the more recent valuation of 3B.

If either guy was interested in actually running an NBA franchise, they'd just buy one.

Its more likely that they want to be involved in creating a new television/media network with a scope beyond just the Wolves. Especially considering how awful the Bally's situation is.

Its also possible they share Lore's vision of creating an entire complex around a stadium that they can fill with whatever they like.

It could also be as simple as they're friends of Lore and see this as a fun side piece and a way to help him out.

[KGdaBom]

A Rod when it comes to owning a sports franchise Is a broke peasant. Lore is more like a well to do peasant. They're probably among the poorest ownership groups in the NBA.

This couldn’t be more false.

I'm just talking about Lore and A Rod. Not their sugar daddies.

[KGdaBom]

That’s not how it works. They own smaller pieces of the franchise, so the only way they could “take over” is if Lore or ARod sold them enough of their shares to make them the majority owner.

I'm trying to gain understanding of how it works. Bloomberg has a 100 Billion net worth, but since he owns a small share of the team what is his obligation to put any money into the day to day operations? Do you think you can explain it for me? Why did Lore and A Rod offer Bloomberg and Schmidt a portion of their really sweet investment rather than keeping it all to themselves? Were Bloomberg and Schmidt buying at the 1.5B price that Lore and A Rod got or were they buying at the more recent valuation of 3B.

If either guy was interested in actually running an NBA franchise, they'd just buy one.

Its more likely that they want to be involved in creating a new television/media network with a scope beyond just the Wolves. Especially considering how awful the Bally's situation is.

Its also possible they share Lore's vision of creating an entire complex around a stadium that they can fill with whatever they like.

It could also be as simple as they're friends of Lore and see this as a fun side piece and a way to help him out.

Fair enough.

[Klomp]

Read on Twitter

The most important message they want to send to basketball fans locally and throughout the league is that the Wolves and Lynx are going to remain in Minnesota for the long haul.

“In the start-up world, I’ve always been driven by the mission, not the money,” Lore said. “And mercenaries are driven by money. And I think anybody who would even contemplate moving the team is clearly a mercenary. The only reason would be for money, right? And that’s just not us.”

Lore and Rodriguez have heard all of the doubts and concerns from local fans over the last several years about the future of the Wolves and Lynx. Lore is from New York and Rodriguez lives in Miami. When the two entered into the agreement, fans immediately assumed that the two would want to move the teams out of the snowy north. They have repeatedly stated their intentions to stay and doubled down again on that now that the deal is official.

“We love the idea of Minnesota history and playing a part in that history,” Lore said. “To move it and start over would be devastating to not only the community and the fans, but us as well. It’s not consistent with our value system.”

Lore and Rodriguez said that Target Center will eventually have to be addressed. It is the second-oldest arena in the league, and the only one with more seats in the upper deck than the lower bowl. That configuration, among many other outdated facets of the building, severely limits revenue generation. The new owners want to build a new arena, but both said they know that project will take time to develop. They said they were not ready to discuss specifics of a plan yet because there is still so much work left to be done.

“We know we want to create a best-in-class arena with separation from the second-best, like really set a new standard,” Lore said. “It’s going to take a lot of work, a lot of thinking on how to innovate with this new arena in a way that no other team has done before us. And that’s something that’s going to take many years. It’s not something that is going to happen in the next few years.”

In the shorter term, Lore and Rodriguez are focusing on making improvements to the fan experience at Target Center in an effort to make the old building feel fresh.

“With how competitive the league has gotten, I think (an arena) is part of the economic model that is more of a necessity in the future than a luxury,” Rodriguez said. “And you see all the great teams that are doing it at the highest level. They have new buildings and the revenues show that.”

[younggunsmn]

OK Lore has some heavy hitters pitching in. What is the status on those guys in the purchase. Any chance they will take over and force Lore and A Rod into the background. Are Lore or Lore and A Rod calling the shots?

That’s not how it works. They own smaller pieces of the franchise, so the only way they could “take over” is if Lore or ARod sold them enough of their shares to make them the majority owner.

I'm trying to gain understanding of how it works. Bloomberg has a 100 Billion net worth, but since he owns a small share of the team what is his obligation to put any money into the day to day operations? Do you think you can explain it for me? Why did Lore and A Rod offer Bloomberg and Schmidt a portion of their really sweet investment rather than keeping it all to themselves? Were Bloomberg and Schmidt buying at the 1.5B price that Lore and A Rod got or were they buying at the more recent valuation of 3B.

The day to day operations of the team are likely financed via some type of operating loan.
If the team operates at a loss, the controlling owners have 2 choices:
1. Take on another loan against the team to finance the debt.
2. Sell more shares for a cash infusion which dilutes their ownership stake further.

Glen Taylor financed the team's losses for 30 years by utilizing option 2.
Since he only bought the team for 94 million, and by the time he sold it, it was worth 15x that, he only ended up selling off 20% of his ownership stake.

To put it in perspective, If Glen Taylor, with a net worth of ~3 billion today, bought the team for 1.5 billion dollars, he would be an considered a pauper among NBA owners and have to thread a needle when it comes to making money vs taking losses to keep control of the franchise with HALF of his net worth wrapped up in the team he just purchased.

Lore/Rodriguez are going to have to thread that same needle.
And Glen's investments are much less volatile and his cash on hand has got to be much higher than Lore.

The Pohlads, who are trying to sell the Twins for 1.7 billion, reportedly have 450 million dollars in debt against the team.
And if they hadnt bought the team for a small fraction of that they would be in big big trouble financially too.

Bloomberg and Schmidt probably bought stakes around the 2.5 billion valuation at the time.
SInce they need to raise 600 million for the current 40% purchase, lets say Lore and Arod put in half of that themselves in cash or loans against their assets.
That leaves 300 million or around a 12% stake sold on this round of financing.
If they buy up Glens final 20% for the 300 million in the purchase agreement, that's another 10% of shares to sell if they can get a 3 billion valuation for it.

Because the valuation of the team went up so rapidly between purchase agreement and closing, they can buy the final 60% of the team and only sell maybe 22% total stake in the team to finance that.
Had the valuation of the team stayed 1.5 billion, they would have had to sell off a 40%+ stake (in addition to the 20+% they sold in the first round) without putting in more of their own money.
They got really lucky there, and that's why they did it, because they either couldnt or didnt want to put in more of their own money.

So the short answer is that yes if the team starts bleeding cash the first option will be for Lore/Arod to sell off more of their ownership stake.
If Bloomberg were to pump more of his own money into the day to day operations, it wouldnt come without getting a bigger share of ownership.
And if Lore tried to leverage debt against the team to finance losses, it would not sit well with the minority owners for sure and at some point they would have legal recourse as shareholders.

[younggunsmn]

Read on Twitter

“With how competitive the league has gotten, I think (an arena) is part of the economic model that is more of a necessity in the future than a luxury,” Rodriguez said. “And you see all the great teams that are doing it at the highest level. They have new buildings and the revenues show that.”[/i]

And the arena shakedown begins.

[shrink]

And the arena shakedown begins.

But, but, they promised us they were going to fund it themselves!

Wait a long time? They already told us they had a spot picked out, but when the media asked the owner, he said that ARod and Lore hadn’t even talked to them about it, and it wasn’t for sale!

Surely they weren’t filling silly fans heads with promises? Fans might need to stop blindly accepting whatever they say, once their selling point of “at least he’s not Taylor!” is gone, and they actually start to hold them accountable for doing what they say to take care of our favorite franchise.

[Neeva]

Good target center is like stuck in 2004, time to upgrade.

[BlacJacMac]

And the arena shakedown begins.

But, but, they promised us they were going to fund it themselves!

Wait a long time? They already told us they had a spot picked out, but when the media asked the owner, he said that ARod and Lore hadn’t even talked to them about it, and it wasn’t for sale!

Surely they weren’t filling silly fans heads with promises? Fans might need to stop blindly accepting whatever they say, once their selling point of “at least he’s not Taylor!” is gone, and they actually start to hold them accountable for doing what they say to take care of our favorite franchise.

Have they said they won't?

Is there anything here that leads you to lean one way or the other?

Lore and Rodriguez said that Target Center will eventually have to be addressed. It is the second-oldest arena in the league, and the only one with more seats in the upper deck than the lower bowl. That configuration, among many other outdated facets of the building, severely limits revenue generation. The new owners want to build a new arena, but both said they know that project will take time to develop. They said they were not ready to discuss specifics of a plan yet because there is still so much work left to be done.

“We know we want to create a best-in-class arena with separation from the second-best, like really set a new standard,” Lore said. “It’s going to take a lot of work, a lot of thinking on how to innovate with this new arena in a way that no other team has done before us. And that’s something that’s going to take many years. It’s not something that is going to happen in the next few years.”

Or is it just the fact that they didn't promise to fund it themselves on Day 1?

Sure, its possible they hold the city hostage at some point for a new arena. Its also possible the super rich partners see Lore's vision and they want to be part of that (and possibly a new media empire to replace the cluster that is Bally Sports/Fan Duel/Diamond Sports Group).

I'm not sure why guys like Bloomberg and Schmidt would join the group if they didn't have a bigger plan than being a minority owner of a sports franchise.

[shrink]

And the arena shakedown begins.

But, but, they promised us they were going to fund it themselves!

Wait a long time? They already told us they had a spot picked out, but when the media asked the owner, he said that ARod and Lore hadn’t even talked to them about it, and it wasn’t for sale!

Surely they weren’t filling silly fans heads with promises? Fans might need to stop blindly accepting whatever they say, once their selling point of “at least he’s not Taylor!” is gone, and they actually start to hold them accountable for doing what they say to take care of our favorite franchise.

Have they said they won't?

You haven’t said you won’t either. That’s not evidence.

I'm not sure why guys like Bloomberg and Schmidt would join the group if they didn't have a bigger plan than being a minority owner of a sports franchise.

Because it’s a good investment?!? Worse, if Bloomberg has bigger plans, there is even less tying him to keep the franchise in MIN. But their investment here (among all their many investments) is not evidence they want to grow the team here.

This is an example. My problem here is that many fans hate Taylor so much, that they don’t care what Lore and ARod say or do, and don’t hold them accountable.

Last year they told us they had land picked out. That was untrue.

Last year they told the Board of Governors they would take team payroll under the lux. Fans rushed to dismiss that too.

A few months ago, they told us that they would fund the whole bill for a new arena themselves. Do we trust that too?

At best, we have dishonest owners, that you hope will do what you want despite any evidence they will live up to their word. At worst, well, you know the worst.

[shrink]

The rebuttal I always see here never has anything to show that ARod and Lore are honest, it’s always, “you love Taylor.”

At some point, posters have to do better. If you believe these are honest men, good for their word, explain why. Make the case.

[BlacJacMac]

But, but, they promised us they were going to fund it themselves!

Wait a long time? They already told us they had a spot picked out, but when the media asked the owner, he said that ARod and Lore hadn’t even talked to them about it, and it wasn’t for sale!

Surely they weren’t filling silly fans heads with promises? Fans might need to stop blindly accepting whatever they say, once their selling point of “at least he’s not Taylor!” is gone, and they actually start to hold them accountable for doing what they say to take care of our favorite franchise.

Have they said they won't?

You haven’t said you won’t either. That’s not evidence.

I'm not sure why guys like Bloomberg and Schmidt would join the group if they didn't have a bigger plan than being a minority owner of a sports franchise.

Because it’s a good investment?!? Worse, if Bloomberg has bigger plans, there is even less tying him to keep the franchise in MIN. But their investment here (among all their many investments) is not evidence they want to grow the team here.

This is an example. My problem here is that many fans hate Taylor so much, that they don’t care what Lore and ARod say or do, and don’t hold them accountable.

Last year they told us they had land picked out. That was untrue.

Last year they told the Board of Governors they would take team payroll under the lux. Fans rushed to dismiss that too.

A few months ago, they told us that they would fund the whole bill for a new arena themselves. Do we trust that too?

At best, we have dishonest owners, that you hope will do what you want despite any evidence they will live up to their word. At worst, well, you know the worst.

You're right!

They haven't done all those things on their first day of controlling the team! They must have been lying!

How could they???

[BlacJacMac]

Last year they told us they had land picked out. That was untrue.

Last year they told the Board of Governors they would take team payroll under the lux. Fans rushed to dismiss that too.

A few months ago, they told us that they would fund the whole bill for a new arena themselves. Do we trust that too?

At best, we have dishonest owners, that you hope will do what you want despite any evidence they will live up to their word. At worst, well, you know the worst.

But seriously (not sarcastically):

#1. This could still be true. I assume if they do have land picked out, they haven't actually purchased it yet, as they've only owned the team for a few hours. They're not going to tell everyone what land they're looking at until they've secured it.

#2. I believe that was just one of numerous proposals and there was some talk (right or wrong) that Glen leaked that one. I want my owners to be prepared for any situation. I want them to consider proposals for being a non-tax team, a 1st apron team and a 2nd apron team.

#3. We have no idea. But IMO, they haven't done anything to make me NOT trust them yet.

So I'd say "At best, we have honest owners that have given us no evidence they won't live up to their word".

[wco81]

With the Lakers selling for $10 billion valuation, the new owners should have a good idea of the ceiling for the Wolves.

You wouldn't think Bloomberg is in it to sell his shares for a few billion profit. Those are scraps to him.

Don't know about Schmidt or Lore but ARod would probably be ecstatic to net a couple billion profit from selling the team.

Didn't he have part ownership of the Miami Marlins and then sell it? Wonder what happened there. Marlins have the lowest payroll in baseball this year.

It doesn't seem like these owners would be interested in paying luxury taxes. Unless Bloomberg buys everyone else out and decides to splurge.

[younggunsmn]

What Lore and AROD want to do and the reality of what they can actually accomplish are two different things.

I simply don't think the revenue for basketball (and sports in general) in this market is where they imagine it to be.
New arena or no new arena. Winning team or losing team.

And with Lore and Arod ending up with around probably around a 60% final stake and being limited in how much they can further dilute their stake before they lose a controlling interest, the pressure to break even financially will be greater than it was under Glen.

And I think that would all be true for any new non mega-billionaire owner who bought the franchise.

Glen financed the team for 30 years without taking on any debt against the team (unlike the Pohlads, who were still notoriously frugal owners).
I do think that he deserves credit for that, from a business owner's perspective, whatever you may think of him.

Just look at the firesale going on in Boston.
There is a new financial reality in this league.

The distorted amount of revenue that the league depends on from the national TV contract in proportion to the entire pie is something they need to be especially concerned about.
Thank goodness they have a salary cap and extra punitive luxury tax, or it would be a MLB with the Yankees and Dodgers situation.

[shrink]

But seriously (not sarcastically):

#1. This could still be true. I assume if they do have land picked out, they haven't actually purchased it yet, as they've only owned the team for a few hours. They're not going to tell everyone what land they're looking at until they've secured it.

But they are going to tell the media? That makes no sense.

#2. I believe that was just one of numerous proposals and there was some talk (right or wrong) that Glen leaked that one. I want my owners to be prepared for any situation. I want them to consider proposals for being a non-tax team, a 1st apron team and a 2nd apron team.

No, the 29 Board of Governors are not going to sit around and listen to numerous proposals. This was another fan-based creation of evidence. Moreover, it was Windhorst who broke the story, who is not in Glen’s pocket, and no source said it wasn’t true.

[BlacJacMac]

Nothing wrong with them saying they have a plan. Also nothing wrong with them not going into detail until there are finalized details. Either way, this one we won’t know the answer to for a while.

Second one is easier. If we enter next season under the tax, you win - and everyone else loses.

[shrink]

Nothing wrong with them saying they have a plan. Also nothing wrong with them not going into detail until there are finalized details. Either way, this one we won’t know the answer to for a while.

Second one is easier. If we enter next season under the tax, you win - and everyone else loses.

This isn’t just “saying you have a plan.” New owners are required to present their plan to the other 29 owners, before they decide if they are a good addition to their little boy’s club. Our FANS didn’t like their plan, (and didn’t like Taylor as the alternative!), so they proceeded to invent other plans that ARod and Lore didn’t even say, and say, “well, they were just lying to the other owners, they are going to do what I want!”

And think about that for a second. If you’re ARod and Lore, what benefit do they get from lying about their plan to go cheap? Going under the lux means they remove a contender with a popular star from contention, and a few may like that. But most do not want cheap owners, because it is bad for the nba brand. Also, teams under the lux don’t add to the lux pool, and take a share away from other cheap teams. So why lie about a plan to go under the lux, when they secretly want to pay more?

For the record, I hope they do pay up to the second apron. Maybe the addition of rich partners will get them to pay (even if we don’t know what they are giving up to Bloomberg). I love this team too. Any decent owners SHOULD pay, after a team makes two WCF’s. But I am frustrated with people that invent evidence, or present unreal alternatives to try to force ARod and Lore’s actual statements into a fantasy that matches what they dream of. Fingers crossed.

[Danimals]

I’m curious why people prefer Taylor. I don’t yet have a strong feeling about Lore and Arod, but Taylor is clearly in the hall of fame for worst owners in sports history.

Absolutely disgusting amount of losing, blatant cheating, nepotism, and trying to back out of the sale of the team at the last minute. Yes he spent into the tax, but I don’t think that outweighs everything else. I’ll gladly take the risk on new owners. They will have to be all time bad to fail worse than Taylor.