Pistons may be tough sell
Wanting to sell the Pistons and selling the Pistons could be vastly different things. Owner Karen Davidson acknowledged Wednesday evening her “decision into inquiring about selling the team.” She released a statement through Marx Layne & Company, not through the Pistons.Davidson assumed control of the team when her husband, Bill, died March 13. He had owned the team since 1974. In 1978, Davidson moved the team from Cobo Arena in downtown Detroit to Silverdome in Pontiac. In 1988, he built the privately funded Palace, one of the first NBA arenas to prominently feature luxury boxes. Among the issues confronting any possible sale of the franchise:
•How much would she want? Forbes magazine, which annually ranks the value of NBA franchises, places the Pistons’ worth at $479 million, fourth-highest in the 30-team league. However, part of the reason the Pistons are so valuable is that they own their arena, the Palace of Auburn Hills, which supplies multiple revenue streams from parking, suites, concessions, etc. It is the modern model for a successful pro franchise. Unknown is what Davidson wants to do, if anything, with Palace Sports & Entertainment, the umbrella group that owns and operates runs the Pistons, the Palace, DTE Energy Music Theatre and Meadow Brook Music Festival. The Pistons and Palace Sports & Entertainment are owned separately, and each has its own roster of partners or directors, although Bill Davidson was the majority owner.
Does his widow want to get out of the sports and entertainment business entirely? Does some deep-pocketed person or group want to buy everything? Would she sell the Pistons but keep the Palace?Without the Palace, the Pistons aren’t worth nearly as much. But how much? And how much would be enough to sell? (Certainly more than the $8 million her late husband paid 36 years ago.) If someone purchased the Pistons but not the Palace, where would they play? Would the new owner settle for being a tenant? It doesn’t make sense that the new owner could keep all the revenue streams. So could the new owner land a sweetheart deal for a new arena (and all the revenue streams) elsewhere in the area — or in another state? Throwing in any possible arrangements with the Ilitch family — other than a total sale of everything — only further complicates matters.
•Can anyone raise the money? The economy, of course, still stinks. Credit is still tight. Free Press columnist Tom Walsh pointed out Tuesday that Palace Sports & Entertainment still holds the note from its sale of the Tampa Bay Lightning in 2008, because the new owners’ financing collapsed. Are there any Michiganders who could afford the Pistons — or Palace Sports & Entertainment? The state has three NBA owners: Davidson, Dan Gilbert of Quicken Loans/Rock Financial (Cleveland Cavaliers) and Rich DeVos of Amway (Orlando Magic).
•Isn’t the market already flooded with NBA teams for sale? The Charlotte Bobcats are looking for a new owner, according to HoopsWorld. The Contra Costa Times reports that Golden State Warriors owner Chris Cohan is shopping the franchise around. The Memphis Grizzlies reportedly have been on the market for several years, but owner Michael Heisley can’t find a buyer. The Washington Wizards, whose owner died in November, are in the process of being sold to Capitals owner Ted Leonsis. Appraisers will determine the value of the sale. The New Jersey Nets are in the final stages of being sold to Russian billionaire Mikhail Prokhorov.
Two NBA franchises sold fairly recently: The Seattle SuperSonics went for $340 million in 2006 to the Professional Basketball Club LLC, headed by Oklahoma City businessman Clay Bennett. The team moved to Oklahoma City after a long legal battle with Seattle. Gilbert bought the Cavaliers for $375 million in 2005 from Gordon Gund.
•What about the NBA? The league, obviously, would not want to have a team leave one of the country’s biggest markets. Could it force Davidson to sell to someone who would keep the team in Detroit? Maybe not. But it could exert pressure, certainly. (For more than three decades, Bill Davidson was known as an owner who often preached to owners to put the league before the team.)
•What about Davidson’s estate? His worth was estimated at $4 billion last year. People familiar with the will and Internal Revenue Service procedures have told the Free Press that settling the estate will take at least several years. Does Karen Davidson have the power to force a sale right now? If not, could she have it in the near future? Her statement that she was “pleased … that the limited partners concur” in her overtures would seem to indicate that she can drive the bus but has to be concerned with the passengers.