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The entirety of the troubled Atlanta Hawks NBA franchise will be sold, which would end a decade of fractured ownership among three groups that at times couldn’t agree on the direction of the team.
The groups have spent the past three months determining the exact portion of the team that would be available for sale, the fallout from a racially charged email leaked in September where one of those owners theorized that an abundance of African-American fans had been bad for business.
Now agreements are in place to sell the entire franchise, a move that could make the team more attractive to buyers who might be reluctant to share ownership.
According to a person familiar with the deal who was not authorized to speak publicly, agreements have been reached between all three ownership groups — formerly operated under The Atlanta Spirit — to sell their complete stakes in the team. Those agreements, which have not been signed by all parties, have been approved by the NBA, which has signaled a commitment to keep the Hawks in Atlanta under new ownership.
The Atlanta Spirit has been a dysfunctional ownership group since they purchased the Hawks, Philips Arena and the NHL’s Thrashers in 2004. Their tenure has been marked by several lawsuits, in-fighting and the sale and relocation of the Thrashers in 2011. The ownership group has long had a poor reputation among Atlanta sports fans. The promise of new ownership, with one clear majority owner, would be welcomed by the community. It is a similar ownership arrangement as many professional sport franchises, including that of Arthur Blank and the Falcons.
“Any time you have a group of multiple owners, you are always going to have issues,” William Sutton, professor and director of the Sport and Entertainment Management program at University of South Florida, told the AJC in September. “There is just no way that you are ever going to have consensus.”
The investment banking firm Goldman Sachs and Inner Circle Sports have previously been retained to handle the sale process. The firms can now begin the process of gathering and vetting prospective buyers. Estimations are the franchise could be sold for upwards of $600 million dollars. The remainder of the sale process could take several months. Once a buyer is identified, it must be approved by the league.
“At this time, the team is not commenting of the report of the sale of the franchise,” Hawks vice president of public relations Garin Narain said.
News that existing owners will sell 100 percent of the team comes at a time interest in the Hawks is growing. The team has been stellar on the court. The Hawks take a 23-8 record into Friday’s game at the Utah Jazz. It is the second-best record in the Eastern Conference and fourth-best mark in the NBA. Attendance and television viewership are both up.
Three months ago, the franchise was thrust into an already raging national conversation about race and the NBA.
The Washington, D.C.-based group, led by controlling owner Bruce Levenson, announced in September that it would sell its 50.1 percent stake following the discovery of a racially inflammatory email that rocked the franchise. An independent investigation discovered an e-mail Levenson wrote in 2012 that included racist remarks about the fan base and game operations. Levenson’s partners Ed Peskowitz and Todd Foreman are also stakeholders in the original group known as the Atlanta Spirit.
Agreements are also in place for the Atlanta-based group of Michael Gearon Jr. and Sr., Rutherford Seydel and Beau Turner, to sell their combined 32.3 percent of the franchise. In addition, the New York-based group, led by Steven Price, has agreed to sell its 17.6 percent stake.
Gearon Jr. was unavailable for comment. The NBA also did not return requests for comment.
The NBA has long preferred a high percentage of the team be available, considering the sale of as much of the team as possible is in the best interests of all parties and the city of Atlanta.
The Hawks are unlikely to be sold and moved to another city. Atlanta mayor Kasim Reed said in September that the city is committed to keeping the Hawks in Atlanta. Gearon Jr. echoed those sentiments. Reed has little to say about the sale process other than the city technically owns the remaining $124 million debt on Philips Arena that is paid by current Hawks ownership.
In addition, the NBA does not want to lose a franchise in a Top-10 market. While the Hawks are 24th in the league in average attendance, Atlanta television viewership of the NBA is strong.
Several people have already expressed interest in being part of an ownership group soon after the controversy came to light. Former NBA players Dominique Wilkins, Dikembe Mutombo and Chris Webber and New York entertainment lawyer Doug Davis are known to have some level of interest. According to one person familiar with the situation, there have been inquiries from other prospective buyers. Reed has said numerous parties have expressed interest to him, including ones with a minority makeup.
A sale to an Atlanta-based ownership group does not appear likely. The team was for sale in 2011 without a bid from an Atlanta group, and the team eventually reached an agreement with Los Angeles businessman Alex Meruelo. That deal eventually fell through and the Spirit group announced its intention to take the team off the market. That was until controversy hit home.
The independent investigation that discovered Levenson’s email was conducted after general manager Danny Ferry made a racially insensitive remark about free-agent target Luol Deng in a June conference call with ownership and management. Gearon Jr. requested that Ferry resign or be fired for cause in the days following the conference call.
On Sept. 9, Levenson announced his intention to sell his controlling interest in the franchise. Days later, although the investigation did not find cause for termination, Ferry asked for and requested an indefinite leave of absence. He has remained away from the team and his ultimate fate will likely be decided by new ownership.
In his email, Levenson wrote of the Hawks’ poor attendance at the time: “My theory is that the black crowd scared away the whites and there are simply not enough affluent black fans to build a significant (sic) season ticket base.”
The issue surfaced just months after the NBA had to deal with racist comments made by Los Angeles Clippers owner Donald Sterling. He was forced to sell the franchise, which sold to Steve Ballmer for a reported $2 billion.
The Milwaukee Bucks were sold in April for a reported $550 million.
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