Glen Taylor, the billionaire former Minnesota state senator who owns the Minnesota Timberwolves, is in the midst of selling his team to online marketing billionaire Marc Lore and not-billionaire-but-pretty-wealthy former disgraced baseball star Alex Rodriguez for around $1.5 billion, and given that neither of those guys are locals, it’s immediately sparked heightened speculation about whether the team could move, maybe to Seattle, which is still on the hunt for a replacement for the Sonics. In response, Taylor told WCCO-AM that his sale agreement contains language to keep the team in town; as reported by the Minneapolis Star Tribune, which Taylor also owns:
“We have it in the contract, they have signed the contract to do that,” Taylor said…
Taylor said in his interview with Chad Hartman that the NBA does not want to see the Wolves moved out of Minnesota to another city like Seattle.
“The real agreement is with the NBA. The NBA will make the decision if somebody’s going to move or not move,” Taylor said. “The NBA will not approve of the Timberwolves moving from here to Seattle. It’s in the NBA’s interest that in Seattle, that a new team is formed. It’s an economic decision that’s in the interest of all of the owners.”…
He also said the new owners “are not going to pay” $1.5 billion to buy the Wolves then another $2 billion or so to move the team.
“That’s the assurance that I have that they aren’t going to move it out there,” Taylor said.
So, we have: Lore and A-Rod won’t move the team because they signed a contract saying they won’t; the NBA won’t let them move; and the NBA might let them move, but would charge the owners so much money to do so that it wouldn’t be worthwhile. That’s totally clear and not at all inconsistent!
In response, the Star Trib linked to an article it ran last July wherein several legal experts said it would be difficult to make a permanent non-relocation agreement in a sale contract enforceable, or to get one approved by the league:
“You could have some contingencies … and I’m sure there could be a provision that relates to keeping the team in place,” said Eldon Ham, an author and professor of sports law at Chicago-Kent College of Law. “But I don’t think it would be able to extend forever.”
At the crux of any guarantee to keep the Wolves in Minnesota would be how long that guarantee would last or how harsh the financial penalty would be for breaking it. Ham said any kind of agreement that makes outlandish demands, like a 30-year promise to keep the team in Minnesota, might not make it past league approval, which requires a $1 million fee just to apply, he said.
“The league itself has to approve all this,” Ham said. “So if you have a ridiculous contract, they’re just going to tell you: ‘We’re not approving this stuff.’”
So, what’s really going on here? Clearly, Taylor, who still needs to maintain his local cred if only to keep Minnesotans from threatening to burn his newspaper in effigy, is trying to do all he can to say that if the Timberwolves ever move, it’s not his fault. So he’s putting in some kind of clause in the sale agreement, but also noting that the NBA would want a ten-figure payoff to let Seattle back into the league, something the new owners are unlikely to put up just to move from one mid-size city to another mid-size city — all of which is true.
But as we’ve seen here time and again, move threats aren’t just about actual threats to move, but ways to (say it all with me now) create leverage for owners to extract concessions from local elected officials. The T-Wolves’ Target Center just got a $140 million renovation in 2017, helped along with $74 million in public money, but at 31 years old it’s also the second-oldest arena in the NBA, and you just know how shiny new sports team owners hate not having the shiniest new buildings to go with their freshly acquired baubles. Hence how there’s somehow only one remaining NBA arena built before 1990, seriously, what kind of planned-obsolescent world are we living in, people?
Anyway: There’s no reason to think that Lore and A-Rod will move the Timberwolves, but there’s also every reason to suspect that they would not be unhappy for the possibility of the Wolves moving to continue to be front-page news in, oh, say, the Minneapolis Star Tribune. Especially if talk of a new arena, or another round of renovations to this one, begins making the rounds. This is all conjecture, mind you — maybe A-Rod will declare “Today, I am a Minnesotan!” and vow that the team will only leave over his dead body — but it’s conjecture informed by a whole lots of sports shakedown history, so let’s just say that if this isn’t the last we hear about Wolves-to-Seattle rumors, don’t be surprised.
And in unison we say “create leverage” much like you hear in a game show.
Interesting experiment: Substitute Howard Schultz and Bennett for the former and potential new owners named in this article.
Sounds familiar, doesn’t it?
I tend to agree with the notion that the team isn’t moving. The NBA wants expansion cash and the hype that a two year (or more) lead in to the new Sonics could create. Why let a coupla guys who just happen to be rich enough to buy the TWolves scoop all that up?
But if the never ending renovation of the old Key Arena can help to shake out some stadium cash for the new guys in Minnesota (or wherever), hey, why not?
I love articles with headlines like “Downfall of ARod”. He’s not a likeable character. However, didn’t he earn $400m or so over his career? And isn’t he still earning money on SNB (no, I don’t know why either… except that he’s less annoying than Vasgersian… ESPN – call Shulman and pay him whatever he wants…)?
Ok, so he lost Jennifer Lopez (we hear). That’s definitely a negative in my book. But downfall? I hardly think so…
Seattle hates A-Rod and I’m sure the feeling is mutual. If anything he’d try and move the team to Vegas.
Neil, this is a rare case where I read something you’ve written and think, “there are things in stark need of, if not necessarily correction, clarification.” I’m sure what you’re reporting is true if not verbatim, but what Taylor was undoubtedly (though, by no means, clearly) stating is that (a) the NBA wants an expansion team in Seattle, to a point where (b) it’s not going to approve any relocation, including from Minneapolis.
That said, if some existing team were, for whatever reason, inclined to move to Seattle, there’s no way the relocation fee for doing so would approach 10 digits. The highest relocation fee in history was what the Rams and Chargers coughed up a few years back, but that was (a) football, and (b) to the #2 population center and media market in the country. A Seattle relocation wouldn’t likely command a relocation fee in excess of $250 million, tops. It’s apparent Taylor is mixing his money pots here.
If/when the NBA goes to Seattle, it’ll be with a sparkling new expansion team. The only question is what 32nd city (St. Louis? Vancouver again? Beijing? Neptune?) gets paired with it.
A few months ago, it was reported that if the NBA was to expand to 32 teams, it was be looking for $2.5 billion in an expansion fee. All the sports leagues, except maybe the NFL, will likely have owners push for expansion to cover their pandemic losses. I don’t see any way Silver would let Lore and ARod buy in less and move them for less than that $2.5 billion number. Really, it might be higher because Seattle is so far and away the strongest market without an NBA team. In the eyes of the owners, it isn’t $2.5 billion split 29 ways as much as leaving $4 billion on the table by not having as strong a market for expansion. Big market owners don’t typically like expansion to small markets because they rely on shared revenue. With Seattle’s corporate base and the rebuilt stadium, it can be a big market NBA team post-pandemic. I think the hold up is finding the second strongest market and a multi-billionaire in that area.
What is the second strongest market for an NBA expansion team? Las Vegas is probably the betting favorite. Adding 2 teams to the western conference would allow Minnesota to move to the east and develop a rivalry with Milwaukee and Chicago. Another city to consider is Montreal. If the NBA can convince Stephen Bronfman to turn his attention from MLB to the NBA, this could be a strong ownership group. Montreal has a larger population than any US city without a NBA team. They could develop a rivalry with Toronto and Boston.
$2.5 billion could be the expansion fee number, but there’s no way the NBA would charge that much for relocation. Think of it this way: $1.5 billion or so gets you a franchise; anything on top of that lets you place it where you want. (That’s not exactly how it works, but the basic principle.)
… And all this because some idiot paid $2Bn for a moribund franchise that Donald Sterling was hoping to sell for $650m?
Where is the evidence that anyone other than you-know-who would be willing to pay $2Bn for an NBA franchise?
We see this a lot in sports… Cubs are rumoured to be sold by the Trib for a number approaching $1bn… the sale price is actually $900m and includes other assets besides the Cubs, but suddenly baseball teams not named the NY Yankees are billion dollar enterprises.
Ditto the Dodgers.
As I’ve noted before, Forbes valuations tend to closely follow “whatever some idiot is willing to pay”. And they don’t often look at details.
For years the Toronto Maple Leafs were valued in the $400-450m range as a franchise. Then two media companies combine to buy the holding company that owns the team (and the Raptors, TFC and other properties – including a highly successful commercial real estate company) for $1.3Bn (for 80% of the company) and suddenly the Leafs alone are worth $1Bn+ according to Forbes?
There is literally no rationale for such valuations beyond “somebody says so” or “some idiot paid that much for them”.
The buyout named above happened in 2012 and valued the whole company at $1.65Bn. Less than a decade later the Leafs alone are reportedly worth $1.5Bn (Forbes 2019) and the Raptors are worth $2Bn also (Forbes Feb 2020).
If the Lakers, Celtics and Knicks are worth $4.5-5Bn as Forbes says, I’d like to see some evidence anyone would pay that.
Are any of those teams really generating a net positive cash flow of $500-600m a year?
“…valuations tend to closely follow ‘whatever some idiot is willing to pay’.”
No better way of determining the value of something than looking at what someone has demonstrated a willingness to pay.
“Are any of those teams really generating a net positive cash flow of $500-600m a year?”
We’re many years past the point where ROI based on cash flow was the determining factor in what one of those “idiots” is willing to pay.
“No better way of determining the value of something than looking at what someone has demonstrated a willingness to pay.”
Keith, that would be true if an NBA (or any other) franchise was available to anyone and there were no artificial limit on the number issued.
You can’t have a FMV discussion without having true market conditions. The willing buyer willing seller model works for my house (or yours) because there are lots of houses and lots of buyers.
This is not true of a restricted market where only 30 franchises (or houses) are allowed.