🐺Where, Wolves -- in London? (or Seattle)
Is ARod heading back to where he started? Plus a Coach K elegy, playoff injuries, unfounded gossip, and more.
OPENING TIP
Well folks, here it is, the single most important factor in the NBA title race:
That, in case you’re unclear, is Joel Embiid’s knee, and, as of Wednesday, it has one fewer intact meniscus than is optimal. In this crazy, compressed season, the playoffs are looking less like a test of skill, and more like a war of attrition. With Jamal Murray, Donovan Mitchell, LeBron James, Chris Paul, Anthony Davis, Joel Embiid, Luka Doncic, and even Donte Divincenzo either out or struggling with injury, it looks increasingly like the team that takes home the title will be the one who stays healthiest.
WOLF BALL
After years of being for sale, the Timberwolves have finally found themselves new owners. Glen Taylor, the longtime (and reviled) owner of the Wolves, agreed to sell the team to Marc Lore and Alex Rodriguez for $1.5 billion.
Controversy followed almost immediately. Taylor has long insisted that the team will stay in Minnesota, and that the sale agreement would require that to happen, even when ARod (and his association with NBA-crazy Seattle) emerged as the buyer. But lo and behold, Taylor lied: the final sale document contains no such restrictions, only requiring that the new owners "present to the Advisory Board [which has no binding authority] for discussion" any plan to "relocate the team outside of the Twin Cities market."
And then the courts got involved! Minority owner / slumlord Meyer Orbach sued Taylor, claiming that the sale agreement violates Orbach’s “tag along rights,” which allow him to sell his 17% minority stake in the team at the same terms as any proposed sale for control. Taylor counters that because the sale to Lore and ARod is happening in stages, a controlling interest hasn’t yet been transferred and thus the tag along rights haven’t yet been triggered.
So the big questions: will the sale go through? And if it does, is the team westward bound to Seattle?
To answer the first question, let’s consider two issues: why tag along rights exist, and why the deal may have been structured as it was. Being a minority shareholder is kind of a shitty deal: sure, you get great seats, but you have to stomach the majority owner’s idiotic decision-making and maybe front cash to fund huge losses generated by said decisions. That’s why a majority stake typically comes with a control premium. Tag along rights exist to prevent control from being acquired on the cheap: any buyer has to come up with the cash not just to buy 51% of the equity, but potentially the entire amount.
So what does that tell us about why the deal was structured as a staged sale? We can think of three possibilities:
The sale really was a clumsy way of avoiding the control premium, letting Taylor get a top tier valuation while leaving his co-owners in the lurch, and he got caught
Taylor couldn’t stand the idea of letting go so quickly, and wanted to use the years before the final sale to “mentor” Lore and ARod on how to be successful NBA owners (clearly, a subject Taylor is a master in)
Lore and ARod need more time to come up with all the cash
Of those three options, the third one seems most plausible. Why? Lore made his fortune selling two tech startups (Quidsi to Amazon, and Jet.com to Walmart), and has an estimated $4B net worth; we can’t imagine he is hard up. ARod is a different story. Yes, he made almost $400M in his playing career. But! Because he had the temerity to make his money as a W2 employee, the government likely took 40-45% of that along the way. And ARod got divorced back in 2008, likely hitting him hard in the wallet. He was hard up enough that he tried to renegotiate his alimony settlement back in 2018. Combine that with reporting that ARod and Lore are 50/50 partners in the deal, and we can see why ARod needs more time to scour the couch cushions.
Let’s say the lawsuit is resolved, and the Lore/ARod group take over the team in 2024 as schedule. Should Minny get the moving vans ready?
No way. Seattle is by far the most attractive market for an NBA team, and the NBA knows that. The NBA is also desperate for cash because of pandemic-incurred losses, and the league is bursting at the seams with talent. As we have written before, it’s a perfect time for expansion. Why would the NBA let the Wolves move to Seattle for free, when they can charge one of the city’s many tech moguls $2.5 billion for the rights to a new franchise?
In fact, we think it’s highly unlikely the team moves at all. Looking at the list of potential NBA markets, there are few superior options that seem realistic:
So if the team isn’t moving, why wouldn’t Taylor insist on a ‘no relocation’ clause? Leverage, baby! As the A’s are demonstrating, the primary means a team has of shaking down its home market for a new stadium is by threatening to leave. Why would Lore and ARod give up that leverage when they don’t have to? As for Taylor, he’s been trying to achieve the impossible: selling the team for top dollar while keeping it in Minnesota. Surely the team is more valuable elsewhere, so with a prohibition from moving, that option value goes away.
To close, we offer our prediction for how this plays out. The lawsuit is resolved to let the deal go through. Seattle gets the Sonics back via expansion, to the relief of Wolves fans. Lore and ARod eventually move the team to Vancouver or Vegas. And Glen Taylor spends the rest of his days wallowing in his filthy lucre while patting himself on the back for his heroic service to his hometown.
TWEET OF THE WEEK
Looks like the Slim Reaper enjoyed Damian Lamonte Ollie Lillard Sr.’s double OT performance as much as we did.
STL INVESTIGATES: SPECIAL K
Mike Krzyzewski, well known American Express pitchman, is retiring. But in addition to his endorsement acumen, it’s worth pointing out that he coached some basketball. With 12 Final Fours, 5 national championships, and 3 Olympic gold medals, he walks away with a resume as impressive as any, ever. We salute him.
Krzyzewski is 74, so it’s not as if this is premature, but it’s hard not to look at the state of basketball and think that the sea change we’re seeing at every level hasn’t contributed.
First, we have the G League and the Ignite. The Ignite just signed 5-star prospect Sterling Henderson, who, at 17, will become the youngest professional basketball player in US history. Duke has plenty to offer, but in addition to every other school, coaches now have to compete with a team that just offered Henderson a contract worth $1 million over two years.
Then, there is Overtime Elite, a breakaway league showcasing 16 to 18 year-olds. Top prep star twins Matt and Ryan Bewley have just signed with OTE, and reportedly both will make seven figures before they turn 18.
And let’s not forget the ‘Transfer Portal’. New NCAA rules, which previously made any player who transferred sit out a year, now allow them to play immediately. The result: almost twice as many players transferring as in any previous year, leading to a frenetic scramble of losing your own players and replacing them with transfers.
It’s hard not to imagine that in a few years, college basketball might be close to unrecognizable, and we suspect Coach K sees the writing on the wall as clearly as anyone.
AT THE BUZZER
End of an era: Ainge steps down, Stevens to move into front office role (ESPN)
NBA players fund Harvard real estate project (WSJ, $)
The Beefiest of all the Basketball Beefs (SBNation)
Here they are: The 100 highest paid athletes in sports (Sportico)