By Maria Saporta and Amy Wenk
Published in the Atlanta Business Chronicle on September 26, 2014
The future of the Atlanta Hawks, in large part, still rests with Bruce Levenson, the managing owner who is on his way out because of a racially charged email he wrote two years ago.
It is up to Levenson, who owns about 24 percent of the team, to hire an investment banker to market the sale of the team. But it is still unclear how much of the team is for sale and how that would play out in terms of its value and future control.
The NBA and Atlanta Mayor Kasim Reed have said that Levenson will sell his share as well as that of his Washington, D.C., partners, which totals 50.1 percent of the team.
“An investment banker has not been hired yet,” said Steve Koonin, president of the Atlanta Hawks, in a telephone interview Sept. 23. “That process has not been started yet, as of today.”
A group of Atlanta owners — Rutherford Seydel, Michael Gearon Sr. and Michael Gearon Jr. — own nearly 32.3 percent of the team.
Their ownership in the Atlanta Hawks has been driven by a love of the team that dates back more than four decades. And, they have let it be known they are not interested in selling their share, nor are they motivated by money.
In his first interview since the Hawks controversy broke on Aug. 31, Atlanta owner Seydel spoke about his emotional attachment to the team — one he has shared with the Gearons.
“We always want what is best for our Atlanta Hawks, and our interest, first and foremost, is ensuring that the Hawks stay in Atlanta,” Seydel said. “Money is the last thing we had on our minds when we got into this. Our dream is to bring a championship to Atlanta. We want to bring our city together.”
Asked about whether he would sell his share of the team, Seydel said he would rather be part of a winning franchise.
“If somebody could convince me that they would invest what was needed in the team, in the community and keep the Hawks in Atlanta, I would be excited to be part of that plan,” Seydel said. “We would like to be a part of that. It’s an exciting opportunity to be part of any sports franchise. To me, the Hawks are where my heart is.”
Seydel, who at times seemed to be speaking for both him and the Gearons, said they were more interested in looking forward.
“The recent unfortunate negativity should not demean this season in any way,” Seydel said. “I will do anything that gets us closer to becoming a championship team. We have got a good team. I’m excited about this season.”
Michael Gearon Jr. did not want to comment for this article.
The dollar value of the Atlanta Hawks on the open market could depend on how much of the team is for sale.
It is not known if Levenson has hired an investment banker to market just the 50.1 percent of the team that he and his partner own, or whether he is hiring them to market the whole team.
Levenson did not return several phone calls and emails.
According to people close to the Hawks, however, the NBA or Levenson could not force the Gearons or Seydel to sell their share of the team.
In addition to the Atlanta owners, in March, a couple of New York investors – headed by Eric Schwartz–purchased about 17.6 percent of the team. Schwartz describes himself as a minority owner of the Atlanta Hawks on his LinkedIn page.
It also is not known whether the New York partners are interested in selling their ownership share of the team.
When asked about the value of the Atlanta Hawks, Koonin said he does not know what it would be.
“We truly don’t know,” he said. But when he was asked to assess Forbes magazine’s value of the Hawks at $425 million – the 27th among the 30 NBA teams – Koonin said: “Not even close.”
The interest among potential buyers of the team has been high, Koonin said. “I got two more calls yesterday.”
The transaction would include the Atlanta Hawks as well as the operating rights to Philips Arena, but that lease only has a few years left.
Speculation in the market about a potential Hawks sale has been quite active.
CNN Money this month reported the Hawks could fetch more than $700 million and up to $1 billion in a sale. The article came on the heels of the $2 billion sale of the Los Angeles Clippers in August, and it cited poor attendance for Hawks games – with about 25 percent of the team’s tickets unsold last season – as a reason it couldn’t score what the Clippers did.
According to ESPN, the Hawks ranked 28th out 30 for attendance during the 2014 season. On average, around 14,000 people attended each of the 41 Hawks home games that season. In comparison, the Chicago Bulls drew nearly 22,000 fans for each of its home games during the 2014 season, ranking it No. 1 for attendance.
Another reason the Hawks couldn’t score as much as the Clippers, CNN Money said, is that the Atlanta market is about half the size of Los Angeles.
But in its favor, the publication claimed a sale of the Hawks could soar above other recent deals, including the purchase earlier this year of the Milwaukee Bucks, which raked in $550 million. That’s because the Hawks’ home, Philips Arena, is a newer and better facility than in those two cities, said CNN Money.
But Bruce Seaman, an economics professor at Georgia State University, does not believe the Hawks could sell for $1 billion. “That would really raise some eyebrows,” Seaman said. “They’ve never really been in the elite valuations in the NBA.” Seaman said he thought a sale could bring $550 million to $600 million, which would put it near the previous record sale prices for an NBA team.
Koonin, however, said Atlanta is a top five TV market for the NBA. It also has major business relationships and sponsors in Atlanta, including Turner Broadcasting System Inc. and The Coca-Cola Co.
It’s for those reasons that Koonin believes that there is almost no chance that the Hawks will be moving out of Atlanta – no matter who the new owners will be.
“I would say the probability of staying in Atlanta is extraordinarily high,” Koonin said. “It is the capital of the South. There’s been zero conversation about the team moving from Atlanta.”
When asked about what kind of owner he would like to see buy whatever share is for sale, Koonin’s answer focused on Atlanta.
“Atlanta is a very unique city. We value diversity. As far as the sale process, it’s a business transaction,” he said. “I hope we have new owners who reflect the values of the organization and the values of the city. I’m really excited about the possibilities.”
Top 10 priciest NBA team purchases
Los Angeles Clippers $2 billion in 2014
Milwaukee Bucks $550 million in 2014
Washington Wizards $550 million in 2010
Sacramento Kings $534 million in 2013
Golden State Warriors $450 million in 2010
Phoenix Suns $401 million in 2004
Memphis Grizzlies $377 million in 2012
Cleveland Cavaliers $375 million in 2005
Seattle Supersonics/OKC Thunder $350 million in 2005
New Orleans Pelicans $338 million in 2012
Source: Staff research