NBA AM: What’s Next For The Hawks?
A look at what is next for the Atlanta Hawks franchise in light of controlling owner Bruce Levenson deciding to sell the team.
What’s Next For The Hawks?: By now you may have already heard that Atlanta Hawks controlling owner Bruce Levenson has announced his intention to sell his interest in the team after an e-mail from 2012 surfaced during an internal audit by one of the other minor owners.
According to Brian Windhorst of ESPN, Levenson’s e-mail surfaced after the team hired an Atlanta law firm to conduct an investigation after an internal scouting report which included racist remarks was read aloud by GM Danny Ferry during a discussion about a potential free agent, being reported to be Luol Deng. The comments prompted one of the owners to call for an investigation into the Hawks research and internal documents on players.
According to Windhorst, the investigation included 19 interviews with personnel and a review of more than 24,000 documents, which included Levenson’s e-mail. The e-mail was turned over to the NBA by the team.
So what’s next for the Hawks?
Levenson Out: According to a released statement, Levenson is voluntarily stepping down and handing over day to day control of the team to Hawks CEO Steve Koonin. Levenson has also agreed to allow the NBA to control the sale process for his interest in the team. Given the enormous sales price that teams have commanded in the last 12 months, there is a belief around the NBA that the Hawks could fetch anywhere from $600-$700 million in an outright sale.
It does not appear that the NBA will be issuing any fines or suspensions in this case.
Up For Sale: The NBA is said to be running the sales process for Levenson’s interest. There have been a number of deep pocketed investors that missed out on the sale of the Milwaukee Bucks and the LA Clippers, who are still at the table with the NBA, so this transaction could happen very quickly, which is why the NBA is running to process.
What’s unclear in a sale is whether or not the existing minority ownership group will try and buyout Levenson’s interest or agree to sell their interest too.
Damage Control: The Hawks are clearly trying to distance themselves from Levenson and his comments, and are trying to contain this as best they can. Several local leaders have gone on record condemning Levenson’s racially charged comments.
The team has also reached out to its players to make them aware of what’s occurred, and what the plan is going to be. With training camps set to open in less than three weeks, the timing of this will make this the story the team has to deal with when they open media day in late September.
Rumor Control: There have been a number of rumors floating around, some with substance, some without much substance at all.
We’ll start with the silly – The Clippers sale price had nothing to do with this situation. Some have intimated that seeing what the Clippers sold for somehow is related to this situation, which is the furthest from the truth. If Levenson and his partners wanted to cash in, they simply could have put the team up for sale again. If anything this damages the process, in many regards especially for a team that has had attendance issues before all this.
Yahoo!’s Adrian Wojnarowski reported that initial reports that Levenson “self-reported” wasn’t necessarily true. The NBA via a spokesperson adamantly denied that notion to Wojnarowski, saying that “Any claim that Mr. Levenson did not self-report his email is categorically false.”
As more details emerge on this, it seems the team decided to turn over the documents to the NBA and that was approved by Levenson, over fears that the document would surface and become public.
There has been some talk of the Hawks being a candidate for relocation. The Hawks currently have a fairly iron clad lease with the city and Phillips Arena that runs through the 2017-2018 season. Exiting that lease could be extremely costly, with estimates suggesting that moving the team could add more than $100 million in break up costs on top of a sale price.
The NBA’s stance on relocation has been pretty well defined; they do not want teams leaving their existing markets unless those markets give up on the team. Some point to low attendance as an example of that, however it’s unlikely the NBA would approve an owner who wants to move the team, especially considering the circumstances in which this team is being put up for sale.
So What’s The Price: There has been a lot of talk about the Clippers $2 billion sale price, however for the Hawks a price north of a billion is highly unlikely.
Forbes posts team valuations every year, and while few teams sell for their Forbes valuation, it is a constant in which to establish a baseline from.
Forbes values the Hawks at $425 million, ranking it 27th in the league. By comparison the Milwaukee Bucks sold for $550 million, and carry a $405 million valuation. The LA Clippers sold for $2 billion in a closed bid process against a $575 million valuation.
The NBA is a unique situation today, mainly because most of the teams have swung to profitability with the introduction of bigger profit sharing, and there is the potential rights fee increase of a new national TV package which could close this year.
The LA Clippers sale price was really an outlier, many because of the condensed bid process and the sealed nature of the bids. The Clippers are in LA, have a strong fan base and an expiring local TV package, which added to its appeal.
The Hawks are in a very different situation. That said the expectation is a sale price north of $700 million, which would be a $275 million premium on its published valuation.
Hawks CEO Steve Koonin told Chris Vivlamore of the Atlanta Journal Constitution that he’s already received several phone calls from interested buyers and has been blown away by the names and number of interested parties.
“I had over seven phone calls directly today from multi-billionaires,” Koonin said. “It blew my mind some of the people who wrote me today.”
“I was shocked that multiple people reached out to me (Sunday).
That level of immediate interest should bode well for a fast sale.
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