Tag: Michael Heisley

Grizzlies arena

Sale of Grizzlies to Robert Pera finalized for $377 million


Michael Heisley bought the team in 2000 for $160 million. In January of this year, Forbes estimated the Memphis Grizzlies to be worth $269 million.

Monday the sale of the Grizzlies from Heisley to Robert Pera became official — at a price of $377 million, according to the Commercial Appeal.

For those of you scoring at home, that is a $217 million profit in 12 years, and if you adjust for inflation (using CPI) it comes to $162 million.

Just remember that next time an owner cries poverty about the tax line or how they are losing money.

But this is good news for the Grizzlies — Pera and his minority owners are now in charge of the franchise. The NBA Board of Governors (made up of the owners) approved the sale last week.

Pera has recruited a wide range of investors to join his bid, including local businessmen such as AutoZone founder J.R. “Pitt” Hyde, investor Staley Cates, financier Duncan Williams, investor Edward Dobbs and cell phone tower developer Billy Orgel. Performer Justin Timberlake, who has Shelby County roots; Memphis native Ashley Manning and her husband Peyton Manning, the NFL and former University of Tennessee quarterback; Tiger basketball legends Penny Hardaway and Elliot Perry; and former Congressman Harold Ford Jr. are also part of Pera’s ownership group.

Pera also agreed to a three-pronged proposal of safeguards that essentially binds the team in Memphis for another 15 years.

It’s impossible to tell how Pera’s ownership will impact what is a good team on the court and the direction they chart for the future. But Heisley was not considered a good owner for most of his term and came into a winning team and fortune on the court the past couple of years. It will be interesting to see what direction Pera will chart from here, and how he will influence front office moves.

Bottom line, an energetic new owner who is locked in to staying in Memphis is good for the city and good for the NBA.

Heisley says age, health motivated him to sell Grizzlies

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The announcement was not a shock — Michael Heisley has been looking to sell the Memphis Grizzlies for a few years now, he has gone down the road more than once only to turn back for various reasons.

But the announcement that he was selling the team to young tech billionaire Robert Pera was unexpected. It’s not going to be immediate — the league has a review process that takes a couple of months then must be voted on by the other owners — but the sale is going to happen short of some unexpected revelation.

Heisley told Chris Tomasson of Fox Sports Florida that his health and age issues are what caused him to make the move now.

“I have stepped aside from my companies,” Heisley, who has been looking to sell the team before, said in an interview with FOX Sports Florida about why he’s selling now. “I’m 75 years of age. I had a couple of medical problems this year (with his heart). I thought the team was in good shape. Fan base was in good shape. I thought if the opportunity presented itself, I would sell the team….

“It’s very bittersweet,” Heisley said of selling the team. “I love Memphis …. I’ve spent a huge amount of money to make the team successful there …. I did it because I love basketball and I love the city of Memphis and the people there, and they’ve treated me fantastic. I have nothing but wonderful feelings …. I’m 75. My son (Michael Heisley Jr.) is not interested in going to Memphis and running the team. So, obviously, at some point it was going to have to be done. And, quite honestly, I thought it was my job to get it done rather than leave it to my heirs.”

There were concerns that Pera might try to move the team, but the Grizzlies have a basically iron clad lease for nine more seasons (until 2021). This team is not moving, not soon anyway.

Pera is reportedly an avid basketball fan who plays a few times a week, and that is the case he should be a good owner. Grizzlies’ fans hope better than Heisley.

Report: Grizzlies’ owner Heisley will sell team to young billionaire Pera


Robert Pera is a 34-year-old billionaire about to own an NBA team. So, what have you been doing with your life?

In a move that Grizzlies have have both hoped for and feared (because the new owner might try to move the team), owner Michael Heisley has apparently found a buyer and will sell the team. So reports Marc Stein at ESPN.

Sources told ESPN.com that Heisley has an agreement in principle to sell the team to communications technology magnate Robert Pera, who at 34 has a spot on Forbes’ list of the 10 youngest billionaries in the world.

The purchase price is in the $350 million range, sources said. A formal announcement to publicize the agreement between the parties is expected this week, possibly as soon as later Monday, with NBA Board of Governors approval then required before Pera can be officially installed as successor to Heisley, who recently turned 75.

Sources say that Pera intends to keep the team in Memphis. The Grizzlies’ lease at the FedExForum, furthermore, ties the team to the city until the year 2021, with steep financial penalties attached to breaking that lease.

That last paragraph is the key — the Grizzlies will not be on the move.

As this team is locked in place for a while, this move could be a good thing for the Grizzlies, a franchise already on the upswing but could different energy and change at the top. Heisley was far from loved by fans. Pera reportedly is an avid basketball player.

We don’t know much about Pera, other than he is a former Apple engineer who founded wireless company Ubiquiti Networks, which is where he made his money. According to Forbes he lives a very stripped-down, no frills life — leases his car, lives in a one-bedroom apartment, the kind of guy who doesn’t check a bag when he travels. Which could be interesting in the frill-filled life of the NBA.

But he could be a real breath of fresh air and help take an already good Grizzles team to new heights.

Of course Michael Heisley is in talks with Larry Ellison, things were going too well

Oklahoma City Thunder v Memphis Grizzlies - Game Six

Best season in franchise history from an overall success and excitement standpoint. First playoff game victory. First playoff series victory. Significant improvements in fan interest and long-term viability of on-court production. Things have been going really well in Memphis, Tennessee when it comes to the Grizzlies.

So, of course, this is happening. From the Memphis Commercial-Appeal:

Californian Larry Ellison, ranked as the third-richest person in the U.S., has inquired about buying the Memphis Grizzlies with apparent hopes of moving the team to San Jose.

But team owner Michael Heisley today downplayed the possibility of a sale — and of a relocation, citing a lease that ties the franchise to Memphis and FedExForum until 2021.

“I can’t downplay it enough. If it happens I’ll be surprised,” said Heisley, a Chicago-based billionaire who added that talks had not become serious. “It’s in the initial stages. We’ve handled this just like we’ve handled several other dozen requests. My situation in Memphis has not changed a lick. My preference will always be for somebody in Memphis to buy the team. There’s not any interest in Memphis. But we’ve always made it known that if somebody wants to buy the team, we’ll listen. If they’re real buyers we’ll probably be sellers. So far there hasn’t been anyone willing to buy the team under my terms and for my price.”

via Oracle Corp.’s Ellison inquires about buying Grizzlies; Heisley downplays possibility » The Commercial Appeal.

I’m not trying to be a negative nellie here, but that to me reads as “I can’t downplay it enough. I want to sell it to someone who doesn’t exist, and this person that does exist and will move the team and has been desperate to get a team for two years is interested, but seriously, no worries.”

Yeah, that’s not good for the Grizzlies sticking around.

If you want more proof — Matt Steinmetz of CSNBayArea.com reports the talks are in an “advanced stage.” Heisley and Ellison may already have a “handshake agreement” according to the report. This just does not look good at all.

Heisley has been consistent in saying he wants to sell. He has resisted investing in a losing team, which you can’t really blame him for. He’s finally put his money where his mouth is in the past year and a half though, handing out contracts to Mike Conley, Rudy Gay, Zach Randolph and Marc Gasol. He recently traded Sam Young for a player not playing in the NBA to avoid the luxury tax. Finances are on the guy’s mind and Memphis is a hard town to pull profit in.

Ellison on the other hand made a swing for the Hornets last year but was rebuffed. If you want some political intrigue, the California teams are wary of another team moving into their markets, especially the Warriors.

Heisley is on record as saying this isn’t a big deal. I can’t stress that enough. He said this isn’t the first pitch Ellison has made, and that there are other suitors, with one matching his $350 million price tag on the team. It’s just concerning because the more Memphis wins, the better value they are for a seller, and while many fans think Memphis is unworthy of having a team, they’ve responded to the Grizz being competitive and “tough” like the town is. Losing them to yet another California zipcode (making it five teams in one state) seems unfortunate for basketball coast to coast.

(HT: Inside Hoops)

NBA franchise values, where some owners can make bank

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It’s one thing left out of the calculations on whether an NBA owner is making money on his franchise — the money he makes on the worth of the franchise.

It’s complex, it’s changing, but the fact remains that a lot of NBA owners have already made tons of money on their teams because what they paid for the franchise is a fraction of what they could sell it for now. That’s money not included in the profit/loss statements, it’s not money the players ever see a penny of (nor should they, the owners put up the money and deserve the rewards).

Tom Ziller broke it down over at SB Nation (and, as is required by law, Ziller broke it down in a tidy graph).

Jerry Buss has seen the Lakers’ value grow $587 million in 21 years. Michael Heisley has seen the Grizzlies’ value grow $97 million in 10 years. Dan Gilbert has seen the Cavaliers’ value grow $101 million in five years. Mark Cuban of the Mavericks: $166 million in 10 years. Cablevision with the Knicks: $286 million in 13 years. And on and on and on …

It’s also worth noting that the NBA owners themselves bought the Hornets for $300 million; George Shinn founded the franchise for a cool $32 million in 1987. So while Shinn cried poor, and while owners cry poor, all they have to do is stick a “for sale” sign out front and those losses turn into massive, massive profits.

The owners will correctly tell you this has not been true in every case, especially in recent years. Bruce Ratner and partners bought the Nets for $300 million and sold 80 percent of it to Mikhail Prokhorov for $200 million. Bob Johnson’s sale of the Bobcats also lost money. Franchise valuations do not just automatically go up every year anymore, and if you are losing money every year you may not be able to cover the costs when the team is sold anymore.

But for a lot of teams, they may lose a little money year-over-year right now, but the owners are sitting on a pile of money with the franchise the players will never see. It’s just another part of the equation.