THE STORY SO FAR
Sept. 8, 2014: Hawks lead owner Bruce Levenson announces he will sell his stake in the franchise after disclosure of racially offensive remarks he made in an internal email.
January 8, 2015: The Hawks confirm that all members of the team's ownership group, formerly known as Atlanta Spirit, have approved a plan to sell the franchise and the Philips Arena operating rights. Sale efforts officially begin.
April 22, 2015: The Hawks announce that an agreement has been reached to sell the team and the arena rights to a group led by Tony Ressler, the co-founder of Los Angeles-based asset management firm Ares Management. The price is about $730 million. Ressler's group includes former NBA star Grant Hill; Richard Schnall, a partner at private equity firm Clayton Dubilier & Rice; Sara Blakely, founder of Atlanta-based undergarment company Spanx; and Marquis Jets co-founder Jesse Itzler, who is Blakely's husband.
WHAT’S NEXT
Remaining steps before the Hawks sale is completed:
- The transaction requires approval of 75 percent of the NBA Board of Governors. A vote will come after the league vets all aspects of the deal. The process can be completed within 60 days, but often takes much longer.
- Final contracts between the buyers and sellers must be drafted and executed.
The pending sale of the Hawks to a group led by billionaire Tony Ressler continues a trend in the NBA: Teams increasingly are acquired by folks who made their fortunes as financiers.
In the past five years, four basketball teams — the Milwaukee Bucks, Philadelphia 76ers, Detroit Pistons and Golden State Warriors — have been bought by heavy hitters from the investment world, which is Ressler’s world.
“The trend is enormously pronounced … in contrast to the old model where the franchise owner was the local businessman or the gentleman sportsman,” said Robert Boland, a New York University sports management professor who consults on team sales.
The new breed of owners could make franchises better-run businesses, Boland said. But there also are potential risks, such as more willingness to relocate teams or flip them for quick profits, he said.
It isn’t hard to understand why asset-management titans are drawn to buying teams, experts said.
“The competitive aspect of sports ownership is very similar to the competitive aspect of (asset management),” Chicago-based sports business consultant Marc Ganis said. “Both are collegial and cut-throat competition at the same time.”
Both are worlds of winners and losers.
“You keep score in the investment business, too. Every day, you beat the market — or not. I think for people who enjoy the challenge of the markets, sports is another market to conquer,” said Mark Attanasio, who is principal owner of baseball’s Milwaukee Brewers, head of an asset-management firm and a friend of Ressler’s since the 1980s.
Ressler’s Ares Management, which has about $86 billion in assets under management, focuses on alternative investments in private equity, direct lending, tradable credit and real estate. On the private equity side, the Los Angeles-based firm has deployed investor funds to buy dozens of companies in whole or large part.
Ressler’s deal to buy the Hawks is a personal investment from a fortune that Forbes magazine has pegged at $1.43 billion.
Provided his group’s $730 million purchase of the Hawks gets NBA approval, Ressler will be the team’s controlling owner and represent it on the NBA Board of Governors. He’ll have much in common professionally with other relative newcomers to that board room:
- The Bucks' owners are Wesley Edens and Marc Lasry, who bought the team last year after making their fortunes in private equity and other investments.
- The 76ers' lead owner is Joshua Harris, a private-equity executive who bought the team in 2011 and worked with Ressler at two investment firms early in their careers.
- The Pistons' owner is Tom Gores, who bought the team in 2011 and, like Ressler, is the founder of a Los Angeles private-equity firm.
- One of the Warriors' co-owners since 2010 is Joe Lacob, a partner in a Silicon Valley venture capital firm. The Warriors' other co-owner is Peter Guber, a veteran Hollywood producer and executive, who knows Ressler and his actress wife Jami Gertz well.
It’s too early to tell if the recently arrived owners with backgrounds in investment businesses are going to have more or less success than those with other backgrounds. This season, the Warriors had the NBA’s best record and the 76ers had the league’s second-worst record.
One trait that private-equity practitioners bring to sports — along with the wealth that allows them to bid for teams at rapidly escalating prices — is a history of owning businesses from afar. That could be useful for Ressler as he oversees the Hawks from the West Coast.
“He has always owned properties and projects that are at a distance,” Guber said. “He understands the challenge and opportunity of being the leader of an organization that is not right next door. What he has is emotional and intellectual proximity to anything he does.”
Boland said someone with a successful background in private equity usually should be “really expert at installing good management.” Ganis agreed, with a caveat.
“In almost all cases, when new sports owners come in, they say they’re going to be hands off and hire the right people,” Ganis said. “Even George Steinbrenner said that when he bought the New York Yankees. It doesn’t always work out that way.
“Since private-equity guys own portfolios of companies that have people running them within certain parameters, their mindsets are geared toward letting that happen with their sports teams. But sports has a way of changing owners. They move from ‘I’ll hire the right people’ to ‘I want to be in the war room for the draft’ and sometimes putting stopwatches around their necks during 40-yard dashes.”
When it comes to buying the teams, at least, people with backgrounds like Ressler’s have the advantage of knowing how to navigate the considerable complexities of putting the deals together.
“In order to buy a sports team, you have to know how to work a transaction,” Attanasio said. “That fits the skill set of a lot of financial professionals because they are transactionally oriented.”
He recalled a conversation with Chicago White Sox and Bulls owner Jerry Reinsdorf after Attanasio’s 2005 purchase of the Brewers was approved by Major League Baseball’s ownership committee.
“Jerry said, ‘Congratulations, you’ve just done the second-hardest thing in America to do. You bought a professional sports team.’
“I said, ‘What’s the hardest thing to do?’
“He said, ‘Well, the hardest thing to do is to sell one.’
“Those two may have flip-flopped now,” Attanasio added last week.
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