We told you yesterday Michigan native and billionaire Tom Gores was now the front runner to purchase the Detroit Pistons.
The Associated Press is now reporting he has a 30-day exclusive window to purchase the team. If a deal is worked out, it could be presented to the Board of Governors (the other NBA owners) for approval All-Star Weekend.
But the deal is not finalized. Mike Ilitch was in an exclusive negotiating period when he got a good look at the Pistons books and dramatically lowered his offer.
We don’t know what Gores will offer for the team. While Forbes last estimated the worth of the Pistons at more than $400 million, the devastating effects of the national economy on Michigan, combined with the struggles of the Pistons team, have others estimating that the sale price will be well below Forbes estimates.
Gores is the founder, chairman and CEO of Platinum Equity. Gores and his firm make their money buying distressed companies, turning them around and selling them for a profit.
The Pistons are owned by Karen Davidson, who took control of the team when her husband Bill passed away in 2009.
Tom Gores, a Michigan native worth an estimated $2.2 billion, will complete his purchase of the Detroit Pistons as soon as next week, the Detroit News reports.
It may well take longer to complete the deal, but the goal is to have the sale done in time to present it to the NBA Board of Governors — the other owners — at their meeting All-Star Weekend, Feb. 18 to 20 in Los Angeles.
Gores was raised in Flint, went to Michigan State, used to sell computer equipment in Michigan but moved to California and now is the man behind Platinum Equity, which is a power in the leveraged buyout business.
He is a guy known for buying struggling businesses and turning them into something profitable. He’s also known as a guy who does not overpay for properties he buys. Forbes had estimated the Pistons (and the Palace at Auburn Hills) to be worth $480 million, but with the down economy hitting Michigan very hard, and the slumping play of the Pistons hurting the team’s gate, this sale is likely for considerably less. No actual sale price has been leaked.
The Pistons are owned by Karen Davidson, who took control of the team after the passing of her husband Bill. She has worked with Citibank as her agent to sell the Pistons.
It appeared Mike Ilitch — the Little Caesars Pizza founder and already owner of the Red Wings and Tigers in Detroit — was going to purchase the team and had an exclusive negotiating agreement after coming is as the high bidder. However, after getting a look at the actual books of the franchise he decreased his offer dramatically. Soon the process was again opened to others.
Now it appears Gores is on the verge of completing purchase of the team. He declined to comment when approached by the Detroit News at last week’s Lakers/Pistons game in Los Angeles (where he lives now).
Karen Davidson inherited the Detroit Pistons when her husband Bill passed away last year. The Pistons were his passion, not hers, she didn’t want to run a team. So she hired Citi Private Bank Sports Advisory to help her sell the Pistons and the Palace.
They found a buyer in Michael Ilitch — who already owned the Detroit Red Wings and Tigers. It seemed a great fit as the founder of the Little Caesars Pizza had plenty of cash to make the deal happen (he is worth $1.7 billion).
Then it hit a stumbling block recently. Forbes’ Mike Ozanian explained what happened.
According to one person familiar with the negotiations, after agreeing to a price in excess of $400 million (my source was not more specific), Ilitch discovered the revenues presented in the prospectus were inflated. Ilitch, one of the great gentleman owners in sports, got pissed, lowered his offer price and the deal quickly blew up. I hope to find out more about the actual price in the near future. But from what I am hearing it will now be hard for Davidson to get $400 million for the team given the Ilitch debacle and dismal state of Detroit’s economy.
It is possible Ilitch still ends up with the team, but it looks like this is going to take a while.