To Hawks fans hoping for a new ownership to breathe new life into a franchise seemingly stuck in the middle, we’re sorry to pass along this news.
The sale of the Hawks to Alex Meruelo has been scuttled — something rumored for a few weeks around concerns about Meruelo’s finances — and now the Atlanta Spirit ownership group has taken the team off the market, reports the Atlanta Journal Constitution.
The agreement between Meruelo and current Hawks owner Atlanta Spirit Group, signed in early August and contingent on NBA approval, was terminated by mutual agreement Friday….
The Spirit says its current plan is to hold on to the franchise indefinitely. “The Atlanta Hawks are no longer for sale,” (Spirit group leader Bruce) Levenson said in a statement. “We’re excited to remain as owners of the Hawks and are committed to building on our string of four straight playoff appearances.”
The Spirit ownership group has the reputation of fighting amongst itself. It does approve odd things like giving Joe Johnson more money than LeBron James. Still it’s a struggle. If the basketball side of the business wants to make a decision it has to lobby and politic to get enough of the owners on their side. And for now, that odd system will continue.
Which means a team that is good — they’ve made the second round of the playoffs the last two years — but not really good enough to challenge for a ring will pretty much stay as they are.
Sorry Hawks fans. It doesn’t bode well for the future. (Although I have to think if another suitor comes along, the Spirit will listen.)
It seemed like a good story — Alex Meruelo was to become the first Hispanic to own an NBA team, and at the same time rescue a good franchise from the clutches of a dysfunctional and unimpressive ownership group. Meruelo was the guy on the white horse, talking big and he already had a press conference as the new owner.
But it turns out, he might not have the money to buy the team.
The sale of the Hawks is in jeopardy because of concerns about Meruelo’s funding, reports Marc Stein of ESPN. Meruelo was to buy 80 percent of the Hawks for a price tag of about $300 million.
Sources told ESPN.com on Wednesday that there are concerns at the league level and within the Hawks’ current ownership group, headed by Michael Gearon Jr. and Bruce Levenson, about whether Meruelo indeed has the sufficient funds to purchase a majority stake in the franchise and operate an NBA team.
Meruelo denied this.
Said Meruelo in a statement: “I have more than ample resources to purchase and operate the Hawks in a first-class manner. I am committed to the purchase of the Atlanta Hawks. While I can’t comment on the details of the approval process, I have and will do everything I can to bring the process to a positive conclusion.”
The Atlanta Spirit would retain ownership for now, which is a punch in the gut to Hawks fans.
Like seemingly everything, this circles back to the lockout.
Part of the reason we have hardline owners pushing the lockout beyond rational limits is because many of those same owners overpaid for those franchise and were heavily leveraged in doing so. When those franchises didn’t rise in value (as they had done the previous 15 plus years) those owners couldn’t justify losing money each year. So they came in and demanded major revenue sharing and givebacks from the players so they could turn a profit.
Bringing another leveraged owner into the mix now would be a poor idea.
It is possible that Meruelo will be able to show he does have the finances in place to purchase this team. The door is not closed. But right now it appears far from a sure thing. If he is out, the Atlanta Spirit (a consortium of owners) would be looking for a new buyer. And it can’t happen fast enough for Hawks fans.
There is few things more useless than a press conference where the new owner of an NBA team cannot talk about the transaction of buying the team (because it has not been finalized by the NBA’s board of Governors) nor can he talk about the players (because there is a lockout).
This made the usually useless presidential debates seem detailed and interesting. At one point he talked about desert (he likes it) and that may have been the highlight of the show.
But Alex Meruelo tried. The Los Angeles businessman who just bought the Hawks tried to say all the right things and sound bold in his introductory press conference. Dominique Wilkins was there. A real attempt was made to show he planned to do good.
“I will never stop trying to win a championship for Atlanta,” Meruelo said.
I will never stop trying to win the Mega Millions lottery. It could happen. But Meruelo seemed to have the attitude of a fighter and that should make Atlanta fans happy. He is moving to the city and you have to like that he seemed passionate.
Meruelo said he had been in talks to buy the team, had backed out when another bidder went into exclusive negotiations (John Moores) but had stepped back in recently.
As for buying during a lockout, he said he just sees “a tremendous amount of opportunity and growth in this sport.”
We all do. Which makes the lockout all the more frustrating.
How much would you pay for the Atlanta Hawks? Wait, don’t answer yet, we’ll throw in a ShamWow for free…
The answer if you are Alex Meruelo is more than $300 million for 75 to 80 percent of the team, reports David Aldridge at NBA.com. That price includes Phillips Arena where the Hawks play. He also took on all debt, which includes $123 million in bonds for the arena.
We could say it, but we’ll let Timberwolves forward Anthony Tolliver do it for us, via twitter:
Why do people keep lining up to buy #NBA franchises (ATL), if they are losing so much money? #hmmm things CONTINUE not to add up. #NBPA
You can bet Meruelo spoke with David Stern and you can bet Stern promised him a better financial situation in the future. But if the NBA were such a broken financial model you would not see six teams sold at top dollar in the last 18 months?
The Atlanta Hawks are being sold to a Los Angeles guy, Alex Meruelo and his Meruelo Group. That has made some Hawks fans uneasy about the future of the Hawks in Atlanta — this is a guy whose life and business interests are in Los Angeles and other teams have already flirted with Anaheim. Plus, the Hawks struggle with the fan base in the way all teams that are not Georgia football do in that city. Plus the NHL’s Thrashers just up and left for Winnipeg.
But the Hawks aren’t going anywhere.
First, Meruelo said the team was staying put in his interview with the Atlanta Journal Constitution. Yes, we know that’s what Clay Bennett said even as he schemed to move his team from Seattle to Oklahoma City, but Los Angeles is already a crowded market, and it’s one the Lakers own. Even in Orange County (trust me, I live half a mile for the Orange Curtain) it’s a Lakers world. Meruelo knows that too.
But there’s another reason, a financial one that is a better reason for the Hawks to stay put. SB Nation Atlanta explains:
However, under the terms of the new bond agreement, the Hawks cannot leave Philips Arena for at least seven years even if they pay off the bonds in their entirety. If the Hawks do leave, there’s a $75 million “early termination penalty” that the Spirit or the new owners that want a team elsewhere would be socked with….
But the (selling ownership group the) Spirit could theoretically pay off the remaining $123.5 million in bonds off tomorrow and the Hawks could leave, but they cannot leave until the 2018-19 season at earliest without also forking over another $75 million in addition to the $123.5 million or so left remaining on the bonds.
Essentially, that’s another $200 million to leave. That’s not happening.
The new owner likely will make changes — hey, anyone want Joe Johnson? — but moving will not be one of them.