Out-of-towners likely to be in control of Atlanta Hawks
By Maria Saporta
Published in the Atlanta Business Chronicle on March 6, 2015
It is highly unlikely someone from Atlanta will be the controlling owner of the Atlanta Hawks when the sale of the basketball team is completed.
According to multiple interviews and other published reports, all the leading members of interested bidders are from other cities. In fact, one report in the New York Daily News has said that Chinese conglomerate Fosun is bidding.
All indications show that at least four groups submitted non-binding prequalifying bids in late February to the two companies overseeing the sale of the Hawks. They were hired by the Hawks owners who are selling their majority stake in the team — namely Bruce Levenson and his partners in the Baltimore-Washington, D.C., area. Levenson announced he would sell his stake after it was revealed he had sent a racially-insensitive email in 2012.
Two companies — Goldman Sachs and Inner Circle Sports — are reportedly vetting the financial viability of the different bidders and will be meeting with representatives of the different groups over the next couple of weeks.
The next step would involve the bidders submitting binding offers for the Hawks, and it has been estimated that the team could be sold for between $800 million and $900 million. Everyone involved has had to sign non-disclosure agreements.
Although Atlanta has many wealthy individuals, it does not have a large group of billionaires who would be willing to spend hundreds of millions of dollars to buy a controlling interest in the Hawks — much less a majority interest.
So according to numerous sources — from both personal interviews and published reports — here is a synopsis of the most likely prospective bidders for the Hawks:
One of the leading teams is led by Steve Kaplan, minority owner and vice chairman of the Memphis Grizzlies. Other members of that team include Jason Levien, former CEO of the Grizzlies who is the current managing general partner of DC United in Major League Soccer, and baseball legend Hank Aaron. ESPN also reported that the Kaplan team includes Indonesian billionaire sports and media magnates Erick Thohir and Handy Poernomo Soetedjo.
Another group interested in bidding on the Hawks is headed by Mark Rachesky, chairman of Lionsgate Entertainment. ESPN.com, quoting unidentified league sources, identified Rachesky as a distressed asset investor who heads up the investment firm MHR Fund Management and is a close associate of John Malone of Liberty Media, the controlling owner of the Atlanta Braves.
Several minority investors are expected to be part of Rachesky’s bid, including Steve Starker, Randy Frankel and Jesse Itzler, a former rapper who is married to Spanx founder Sara Blakely.
For the past several weeks, there has been widespread speculation that two former NBA players, Grant Hill and Junior Bridgeman, a leading Wendy’s franchisee, had teamed up to put together a bid to purchase the Hawks.
According to several reports, their group included Bryan Colangelo, former general manager of the Phoenix Suns and Toronto Raptors, and his father, Jerry Colangelo, former owner of the Suns.
Former NBA player Chris Webber also had been trying to put a team together to buy the Hawks, but as of press time, there was no confirmation that he had submitted a prequalifying bid.
Based on all information currently available, no one from Atlanta likely would own a controlling interest in the Hawks, according to people close to the situation.
Hawks President Steve Koonin, however, indicated that it was still too early in the process to make such a unilateral statement.
“There are significant Atlanta folks involved,” Koonin wrote in an email — reiterating that he was subject to a non-disclosure agreement. “NOBODY has determined percent of ownership yet.”
Several wealthy local business leaders have expressed an interest to become minority owners in the Hawks, and they have talked among themselves about being available to join up with any one of the out-of-town bidders.
As previously reported by Atlanta Business Chronicle, the husbands of the WNBA Atlanta Dream owners, Kelly Loeffler and Mary Brock, are interested in supporting their wives’ investment by buying a stake in the Hawks.
Jeff Sprecher, CEO of Intercontinental Exchange Inc., and John Brock, CEO of Coca-Cola Enterprises Inc., see the opportunities to jointly market the Hawks and the Dream to a new audience.
Another local businessman who has emerged as an interested minority buyer is Doug Hertz, president and chief operating officer of United Distributors Inc.
Hertz has been an active player in Atlanta cultural, civic and business circles. He currently serves as chairman of the Woodruff Arts Center and as chair of the Georgia Research Alliance. He also is a minority owner of the Atlanta Falcons.
According to people close to the Hawks, there are several people from the city who are watching to see which team will end up with the winning bid.
At that time, a serious courtship between the prospective new owner and Atlanta minority owners is expected to begin. But much will depend on how expensive a price-tag is put on the Hawks and whether the the locals are able to see “an upside” in making such an investment.
The new ownership rules of the National Basketball Association state that no team can have more than 25 owners, and each owner must have at least a 1 percent share of the team. If the Hawks sell for $800 million, that means that one would have to invest a minimum of $8 million to be an owner.
Also, one point that often is overlooked is that it is expected that the current Atlanta owners of the team — Michael Gearon Sr., Michael Gearon Jr. and Rutherford Seydel — will end up having a stake in the Hawks no matter who ends up buying the team.