Last month, the owners of the Golden State Warriors approached the National Basketball Association for approval to sell a minority stake in the team – not to another business Mogul, but to a publicly traded blanc-check company that The firm was partnered with a private equity firm, The Post has learned.
Sources said the unnamed institutional buyer – who, according to sources, had the backing of minority boss Silath Valley tycoon Palath Pipatiyati in the Warriors – was confident that the NBA would fix him to buy the stake, sources said.
But the NBA’s advisory / finance committee made a decision and the Warriors withdrew the request, realizing it was dead, according to three people familiar with the matter.
The failed game comes as professional sports teams – from the NBA to Major League Baseball – are squeezed by the epidemic, which has now evacuated arenas and stadiums for a year. The losses of the team at large have crushed the capital to investors. Many of them are now looking for an exit, but are finding that there is a shortage of ready or able-bodied individuals to move to their place.
Enter Wall Street Pandemic RedBall Acquisition Corp. And has opened the floodgates of financial institutions with names like Arctos Sports Partners.
If they are successful, it can change the face of professional sports forever, but thus they have trouble completing a single deal.
Sources said billionaire owner Glenn Taylor of Minnesota Timberwells went to the NBA a few months ago to buy small bets in teams with a pitch to sell to Arctos, a private-equity firm formed in 2019. Sources said the idea was shot down because the Arctos were not approved by the NBA.
Arctos recently filed to raise funds through a blank-check company, which would be used to buy bets in basketball or baseball teams that needed capital to cover losses. This is happening even when neither the NBA nor the MLB have approved the controversial idea.
Also known as SPACs, or special-purpose acquisition corporations, blank-check companies list themselves on a public exchange such as the NYSE to merge with the business and make it public.
According to SPACInsider, including Arctos, Sports is now looking to buy five SPAC stakes in the sports franchise, raising $ 275 million on February 23 for an empty check company on the NYSE.
The goal acquisition, formed by former agent David Falk of NBA veteran Michael Jordan this month, raised $ 225 million after being listed on the Nasdaq stock market. Sports franchise. . . Are facing huge pressure on cash flow, leaving ownership groups without hunger, nor liquidity to continue franchise funding for an undetermined period, ”it told investors in its prospectus.
The SportsTech acquisition, formed by former Houston Astros general manager Jeff Luhoven, raised $ 150 million last week via Nasdaq. Sports Ventures Acquisition Corp, formed by sports investment banker Rob Tillis, completed a $ 230 million IPO on 6 January.
Sources say that various SPAC owners have contacted almost every NBA owner in the past year. And there are many NBA owners – especially small minority owners – who want the option of selling to entities, these people added.
Sources said that in fact, some corners of NBA ownership are causing frustration with how the NBA, under the leadership of Commissioner Adam Silver, is slowly working on a solution.
“The pressure on Adam is staggering,” a source in the NBA office said.
In July, the NBA opened the door to Dial Capital Partners – a private capital-equity firm – a unit of Wall Street investment firm Nuburger Burman, to buy small minority bets in NBA teams. Sources said Dial has entered into agreements with some owners, but cannot complete the deal until the completion of the new fund due next month.
The NBA is also interviewing buyout firms beyond Dyal. In letting them in, Silver may need to loosen the NBA’s ownership rules. Specifically, the funds have asked him to forgive the current rule that says the NBA can force any owner at any time who finds that it is bad for the league.
A source said, “Private-equity firms are super keen but the current provision is a non-starter.”
With private equity coming into more headlines than SPACs, Joe Lacob, the majority owner of the Warriors, now private equity only in his efforts to sell at least a 5 percent stake of the epidemic-fueled money-losing team, including billionaire Howard Marks. Talking to firms. Oaktree Capital Management, sources said.
In response to the Warriors’ request to the SPAC last month, the NBA raised concerns that investing these publicly traded entities into teams could artificially lower their values. Once a share of a team also starts trading on the public stock exchange, its valuation will be subject to the will of the investors.
NBA sources said that the ownership of SPAC could similarly help the league financially exposed through public filings.
Currently, the publicly traded NBA team is the New York knock of billionaire James Dolan. It is owned by Madison Square Garden Sports, which does not disclose the team’s finances.
The SPACs are also selecting MLB teams. RedBall Acquisition Corp, which raised $ 500 million in August last year, has been in talks for months to buy a stake in Fenway Sports Group, which controls the Boston Red Sox and Liverpool FC football team, but an agreement for a price Has failed to reach. Sources said
Three-fourths of MLB owners must also approve a minority stake sale to an SPAC. But whether they will fix it is an open question – a source said that many baseball owners have told them they will vote on seeing it.
This is why some Wall Streeters feel that basketball, not baseball, will be the next frontier for complex financial instruments.
“Baseball people are dinosaurs,” a sports financier said. “NBA is a forward-looking league. If it is going to happen, it is going to be there. “
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