The proposed sale of the Hawks to Los Angeles businessman Alex Meruelo has hit a significant snag in the NBA approval process, according to people familiar with the situation.
It is not clear at this point whether the deal will be completed.
Although Meruelo signed what he called a “definitive” agreement in early August to buy a majority stake in the Hawks from current owner Atlanta Spirit Group, the deal was contingent on the approval of the NBA Board of Governors. That has not been obtained as the league, as part of an extensive approval process, seeks financial assurances that Meruelo can fund the team’s ongoing operations.
Meruelo declined to be interviewed Wednesday, but in a statement provided to The Atlanta Journal-Constitution, said he has the financial ability to operate the Hawks and intends to complete the purchase.
“I have more than ample resources to purchase and operate the Hawks in a first-class manner,” Meruelo’s statement said. “I am committed to the purchase of the Atlanta Hawks.
“While I can’t comment on the details of the approval process, I have [done] and will do everything I can to bring the process to a positive conclusion.”
If Meruelo’s deal is not completed, the Spirit group — led by Bruce Levenson, Ed Peskowitz and Michael Gearon Jr. — would remain the Hawks’ owner, at least until another buyer is found.
Both the NBA and Atlanta Spirit declined to discuss the Meruelo matter Wednesday.
“No, we won’t be making a comment,” NBA senior vice president of communications Tim Frank said in an email.
As of Wednesday night, the proposed deal had not been terminated by either side, or by the NBA, but was in peril, according to the people familiar with the situation.
It has been clear in recent weeks that Meruelo’s deal had run into difficulty.
When the NBA Board of Governors last week approved the sale of another team, the Philadelphia 76ers, the league took no action on the Hawks deal and remained mum on the matter.
Another indication of trouble with the Hawks sale came Tuesday, when Levenson and Gearon attended an NBA owners meeting in New York about the league’s ongoing lockout. It is believed to be the first owners’ meeting Gearon had attended since reaching the agreement to sell to Meruelo.
Specific details of the issue threatening the deal are not clear. A confidentiality agreement prohibits Meruelo and the Spirit group from discussing such issues publicly.
However, the Spirit’s 2004 purchase of the Hawks and Thrashers from Time Warner provides a case study of the complications than can ensnare proposed deals in the approval process, particularly when money-losing franchises are involved.
In 2004, as a condition of approval, the NBA and NHL required that several Spirit partners put up tens of millions of dollars in personal financial guarantees to ensure the teams would have liquidity to guard against future losses. The Spirit eventually satisfied the leagues’ requirement, but it took a complex reworking of the transaction.
The Spirit sold the Thrashers in June to a Canadian group that moved the hockey team to Winnipeg.
Meruelo, 48, is the founder and chairman of The Meruelo Group, a holding company that owns businesses ranging from pizza restaurants and construction firms to a casino and a TV station. Earlier this year, he purchased the Grand Sierra Resort and Casino in Reno, Nev., and KWHY-TV, a Spanish-language station in Los Angeles.
Under the proposed Hawks deal, the Spirit would maintain a sizable minority stake in the franchise, but Meruelo would control all ownership decisions and be responsible for all financial losses.
The deal also would include the Philips Arena operating rights.
About the Author
