Hawks owner Bruce Levenson announced in September his intention to sale his stake of the team, following admission he authored a racially insensitive e-mail to general manager Danny Ferry (background).
Photo: Johnny Crawford / AJC File
Photo: Johnny Crawford / AJC File

Slow sale process another sign of Hawks’ ownership woes

The Hawks are no closer to being sold than the day controlling owner Bruce Levenson announced he would sell his stake in the franchise in early September. The glacial progress is another sign of the continued dysfunction that has been an earmark of the ownership group as well as a reflection of the complexity of multi-owner sports franchises.

Last summer, it took just 109 days between the release of the audio tape containing racist comments made by Los Angeles Clippers owner Donald Sterling to the official announcement of the franchise’s sale. That timeline contained several court hearings, including one to determine Sterling’s competency.

By stark contrast, it has been 47 days since Levenson admitted to and released a racially inflammatory email he wrote concerning the makeup of the Hawks’ fan base and announced his intention to sell. Despite admitting guilt and with prior consultation with the NBA league office, there is no end in sight for the completion of a deal.

It has been 138 days since general manager Danny Ferry made the racially insensitive remarks about free-agent Luol Deng on a conference call with ownership and management that prompted the independent investigation that discovered the Levenson email.

Since then, several issues have arose:

  • Exactly how much of the franchise is for sale? There has yet to be an Atlanta Spirit ownership meeting to vote on the stakes available to those who have expressed interest in the team.
  • Levenson can force up to 60 percent of the franchise to be sold, although he and his partners in Washington own 50.1 percent.
  • The NBA may be applying pressure for all groups to sell their entire shares.
  • The ownership group has yet to even settle on an investment banking firm to vet prospective buyers.

A majority decision

According to their partnership, Levenson has the power to force the sale of up to 60 percent of the franchise, according to several people familiar with the situation, even though he and his Washington-based partners intend to sell their 50.1 percent share. That means some ownership stake from the remaining partners could be sold as part of the purchase.

Levenson currently owns 24 percent of the franchise as an individual. The Atlanta group holds 34 percent and the New York group holds 16 percent, according to several people familiar with the situation. The breakdown between the partners, which may number up to 12 individuals (the group has never divulged all idenities), has not been disclosed.

According to those familiar with the situation, the goal of the Atlanta group is to retain ownership, even if it turns out to be less of their current stakes. That would be done without a hand in deciding who the new controlling owner would be.

In essence, Levenson will decide how and when the Hawks will be sold.

“(Levenson) has already been declared guilty so why does he get to decide how, when and if the team will be sold?” said one person familiar with the situation.

The NBA is believed to be putting pressure on the other remaining groups to sell their entire stakes so that the franchise could have completely new ownership and a fresh start.

Atlanta Spirit has yet to meet, much less to vote, on what shares will be made available, a determination many thought would happen quickly following Levenson’s announcement to sell. According to one person, the first communication as a group occurred last week and that was to announce a list of possible investment bankers that will be hired to vet prospective buyers once the sales process reaches that stage.

NBA involvement

The NBA Board of Governors meets in New York this week with no clear available resolution on the Hawks. The team has “ownership representation” at the meetings, according to CEO Steve Koonin. He declined to specify which owners are in attendance at the meetings, but said two people are representing the team. It is possible, since the sale process is ongoing, that Levenson is one of those representatives.

According to one source, Levenson was stripped of his committee duties within the Board of Governors. Commissioner Adam Silver, when he was still deputy commissioner, told The Atlanta Journal-Constitution in 2012 that Levenson served on “several important ownership committees.

Levenson has told the AJC he has been involved in the NBA owners’ planning committee, which works on revenue-sharing issues, and on committees that interviewed prospective buyers of two franchises that changed hands.

In the case of Sterling, the Board of Governors voted to “initiate a change” concerning the Clippers ownership. In order to terminate ownership rights, 75 percent of the 30 team owners (23) would have to vote to sustain the charge and force a sale.

The next Board of Governors meeting is scheduled for April, although a special session could be called if needed.

Levenson was one of the first NBA owners to condemn statements by Sterling, calling his words “ignorant, offensive and very disturbing” one day after they were made public.

But two years earlier, Levenson had written about the Hawks’ poor attendance: “My theory is that the black crowd scared away the whites and there are simply not enough affluent black fans to build a signficant (sic) season ticket base.”

The NBA moved swiftly concerning Sterling based on the egregiousness of his comments.

A slow process

According to one person, there is considerable “frustration” with the length of the sale process.

Atlanta mayor Kasim Reed, pressing for a quick solution to the sale, said three weeks ago: “I will tell you there is some increasing urgency about when will we move forward with a new owner.”

But he has been, at best, inaccurate in his depiction of a speedy sale and the financials are hardly cut and dried. The city technically owns the debt on Philips Arena in the Fulton County Recreation Authority. Hawks ownership pays on the remaining $124 million in debt on the building.

Koonin and Reed have said several individuals and groups that have expressed interest in the Hawks but there can be no progress until the available percentages are determined. Former NBA players Dominique Wilkins, Chris Webber and Dikembe Mutombo and entertainment lawyer Doug Davis are among those to have shown interest in being part of an ownership group.

Impact on the team

The delay in the sale may soon have an on-court effect on the Hawks. The team is operating with Ferry on an indefinite leave of absence and coach Mike Budenholzer in charge of basketball operations. Budenholzer has been balancing several tasks, including keeping an open ear to player concerns, addressing public questions about the image of the franchise and getting a team ready for the grind of an 82-game season.

“I think we want to be sensitive to what has happened,” Budenholzer said when training camp opened. “But we also want to help the community heal and move forward and get back to the task at hand and prepare for the season.”

The team has neither fired nor asked for Ferry’s resignation, although the Atlanta group would like to see him removed.

“He’s on a leave of absence,” Koonin told the AJC this month. “He is technically an employee, but he has no functioning responsibility.”

Ferry has three years remaining on the six-year, $18 million contract he signed when he joined the team in 2012. After the initial outcry over his comments, Ferry has received support and/or forgiveness from many, including Deng. The team faces on-court decisions that have to be made, including the trade deadline in February, without a full-time GM.

The team will face possible media and fan reaction about the comments made by both Levenson and Ferry in each stop once the regular season starts Wednesday in Toronto. How the Atlanta fan base reacts also remains to be seen.

The team has played three home exhibition games to sparse crowds, but such contests rarely draw. Whether the offseason firestorm has meant fans will stay away from Philips Arena remains to be seen.

The Hawks, who have suffered poor attendance in the past, plan several incentives for fans to attend the home opener Nov. 1 against Indiana, including a concert by Tip T.I. Harris and the unveiling of a million-dollar 3-D projection system with new sound and video equipment.

Support real journalism. Support local journalism. Subscribe to The Atlanta Journal-Constitution today. See offers.

Your subscription to the Atlanta Journal-Constitution funds in-depth reporting and investigations that keep you informed. Thank you for supporting real journalism.

X