Efforts by the Atlanta Spirit ownership group to sell a majority stake in the Hawks have accelerated since the group’s sale of the Thrashers last month.
People familiar with the process say representatives of a potential buyer are doing due diligence — examining financial records — as the process moves toward a possible offer and more detailed negotiations for the basketball team and Philips Arena operating rights.
The people familiar with the situation, speaking exclusively with The Atlanta Journal-Constitution, would not identify the potential bidder because of confidentiality agreements, but described the process as moving fast. They said no offer or exclusive negotiating agreement is in place but that the potential bidder, who might have partners, has the financial wherewithal to complete a transaction.
The potential buyer has accountants and lawyers working extensively on the matter.
Typically, the sale of a majority stake in an NBA franchise is a complex, multi-tiered process. The next step after due diligence would be for the parties to reach agreement on the parameters of a deal and sign a letter of intent. At that point, the buyer and seller typically would enter into an exclusive negotiating period — often for 30 to 90 days — to hammer out details of a deal, which then would have to be approved by the NBA.
When the Atlanta Spirit purchased the Hawks, Thrashers and operating rights to Philips Arena in 2004, the process took nine months even after a preliminary agreement was reached. The delay was attributable in part to internal issues within the Spirit group and the need for two leagues’ approval.
Spirit partners Michael Gearon Jr. and Bruce Levenson could not be reached for comment Wednesday. Gearon is in Asia on other business.
Under the deal being discussed, current ownership would retain a significant minority stake. Gearon has previously stated his desire to retain his stake.
The Atlanta Spirit last month refuted an SI.com report as “not true” that a sale of the Hawks was imminent, issuing the following statement: “As we have stated for an extended period of time, we engaged an investment banker to assist us in looking for investors for the Atlanta Hawks and Philips Arena operating rights. We have spoken with a number of parties, but at this time, there is no deal in place, nor is there an exclusive negotiating agreement in place. We will have no further comment at this time.”
As the AJC previously has reported, the Hawks’ ownership group, through the investment banking firm the Raine Group, has had talks with various potential buyers or investors over the past year.
The latest round of talks follow an exclusive negotiating period with another prospective purchaser, outgoing San Diego Padres owner John Moores. That exclusivity was ended by mutual agreement May 20, reopening the process to other bidders.
According to one of the people familiar with the situation, the latest potential buyer did not have an interest in the Thrashers, who were sold to True North Sports and Entertainment for $170 million and relocated to Winnipeg. The NHL received $60 million of the purchase price as a relocation fee. That transaction was completed quickly by normal standards after the NHL gave the sides permission to speak about a sale and relocation because there was a narrow timeline to complete a deal for the start of next season.
It is unlikely that the Hawks would be moved, as happened with the Thrashers. The NBA would be unlikely to approve such a move, and in order to move the Hawks a potential owner also would have to pay off the remaining $120 million in bonds on Philips Arena and pay the city of Atlanta and Fulton County a $75 million penalty in addition to the purchase price.
