Another new owner incoming

[Lipoli390]

He's a moderate democrat, being fairly conservative on economics (business friendly) and education (pro-school choice) and more liberal socially. I'd say the media arm of his business empire somewhat reflects this as well. Hard to find news sources these days that are fairly down the middle - Bloomberg News comes close.

But that's all besides the point. He made his real money with trading terminals and software that financial firms use to this day. Expensive stuff that his namesake company has a chokehold on. As far as I know, it's still privately held with him as the majority owner.

I don't see this news as anything but good. It doesn't sound like he'd needlessly meddle and he's basically a big gun to help buttress the finances of the Lore/Arod group.

I agree. This is terrific news.

[Carlos Danger]

Only potential red flag is there are now a lot of NY guys owing our team....I know they can't move us back to NY because they already have teams. But I'm trying to wrap my head around why NY guys would be so interested in buying OUR shitty franchise? Did they just get a really good deal and hoping to flip/make more $? I'm not much of a G. Taylor fan. But he is a home grown success story. It made sense that he bought the team because of his roots. Help me understand what a bunch of New Yorkers have in mind with this deal?

I spent several years living in NJ right across from NYC - people are different out there vs. here. I feel like there is something the new potential owners have up their sleeve that we won't know about until later...

[Q-is-here]

Only potential red flag is there are now a lot of NY guys owing our team....I know they can't move us back to NY because they already have teams. But I'm trying to wrap my head around why NY guys would be so interested in buying OUR shitty franchise? Did they just get a really good deal and hoping to flip/make more $? I'm not much of a G. Taylor fan. But he is a home grown success story. It made sense that he bought the team because of his roots. Help me understand what a bunch of New Yorkers have in mind with this deal?

I spent several years living in NJ right across from NYC - people are different out there vs. here. I feel like there is something the new potential owners have up their sleeve that we won't know about until later...

Because there are only 30 NBA franchises and they have become extremely valuable. There are very few people in Minnesota, much less the greater Midwest, that have the kind of money to buy the Timberwolves. The kind of money one needs to own it tend to reside in places like New York, California, Texas, and Florida.

I haven't actually looked it up, but my guess a lot of owners of professional sports franchises don't have their primary residence in the state of the franchise.

[Lipoli390]

Only potential red flag is there are now a lot of NY guys owing our team....I know they can't move us back to NY because they already have teams. But I'm trying to wrap my head around why NY guys would be so interested in buying OUR shitty franchise? Did they just get a really good deal and hoping to flip/make more $? I'm not much of a G. Taylor fan. But he is a home grown success story. It made sense that he bought the team because of his roots. Help me understand what a bunch of New Yorkers have in mind with this deal?

I spent several years living in NJ right across from NYC - people are different out there vs. here. I feel like there is something the new potential owners have up their sleeve that we won't know about until later...

Because there are only 30 NBA franchises and they have become extremely valuable. There are very few people in Minnesota, much less the greater Midwest, that have the kind of money to buy the Timberwolves. The kind of money one needs to own it tend to reside in places like New York, California, Texas, and Florida.

I haven't actually looked it up, but my guess a lot of owners of professional sports franchises don't have their primary residence in the state of the franchise.

You nailed it, Q. A few additional thoughts:

1. As a result of having only 30 teams as you note, all NBA franchises, including what some might call “shitty” ones, are dramatically increasing in value. And yet, they are all also incredibly safe investments because, unlike other businesses, an NBA franchise will never disappear in Chapter 7 bankruptcy or decline in value to the point where you have to sell at a loss. It’s really rare to find a business with rapidly escalating valuations that is also almost entirely free from downside risk.

2. Everyone who hasn’t been living in a cave the past few years knows the NBA is going to expand into at least two new markets (Las Vegas & Seattle) in the next five years. Expansion will result in HUGE franchise fee distributions to all the existing NBA organizations. So there’s a huge pile of free money on the near horizon for any NBA owner.

3. Owning an NBA franchises can provide cross-marketing opportunities for an owner’s other businesses. An NBA franchise is another entry point into the incredibly lucrative entertainment business with stars and rapidly loyal followers. Lot’s of opportunity for really smart business people who have already amassed billions through their business acumen.

4. An NBA owner with a franchise that has operational losses can turn those losses into significant tax benefits.

5. While the Timberwolves might be fairly considered a “shitty” franchise, the team is in a great market and it’s the market that matters. The Wolves are in the Nation’s 15th largest media market. To put that in perspective, Denver is 16th, Orlando 17th, Miami 18th, Cleveland 19th, Portland 22nd, Milwaukee 38th and Vegas 40th. Therein lies the value since the NBA is driven largely by media revenue. Also, the Twin Cities has a particularly strong economy with lots of money. Minneapolis/St. Paul together are 9th nationally in the number of Fortune 500 company headquarters. Minnesota has one of most diverse and therefore resilient economies in the Country. There’s a reason David Stern intervened to keep the Wolves in Minneapolis when Glen Taylor appeared out of nowhere to buy the team. This is an attractive market for owing a professional sports franchise.

[Lipoli390]

I’ll add that it’s certainly possible the Wolves could be moved to another City down the road. But that’s highly unlikely for a lot of reasons. One of those reasons is that there are very few if any more attractive markets for an NBA franchise and two of them, Seattle and Vegas, are going to get new franchises. I might worry if we were being bought by someone who resides in Seattle, Vegas, Columbus Ohio, Louisville Kentucky, St. Louis Missouri or Nashville Tennessee. Those are sizable, attractive markets that could sustain an NBA franchise. But having a bunch of New York owners doesn’t concern me.

[Wolvesfan21]

Only potential red flag is there are now a lot of NY guys owing our team....I know they can't move us back to NY because they already have teams. But I'm trying to wrap my head around why NY guys would be so interested in buying OUR shitty franchise? Did they just get a really good deal and hoping to flip/make more $? I'm not much of a G. Taylor fan. But he is a home grown success story. It made sense that he bought the team because of his roots. Help me understand what a bunch of New Yorkers have in mind with this deal?

I spent several years living in NJ right across from NYC - people are different out there vs. here. I feel like there is something the new potential owners have up their sleeve that we won't know about until later...

Because there are only 30 NBA franchises and they have become extremely valuable. There are very few people in Minnesota, much less the greater Midwest, that have the kind of money to buy the Timberwolves. The kind of money one needs to own it tend to reside in places like New York, California, Texas, and Florida.

I haven't actually looked it up, but my guess a lot of owners of professional sports franchises don't have their primary residence in the state of the franchise.

You nailed it, Q. A few additional thoughts:

1. As a result of having only 30 teams as you note, all NBA franchises, including what some might call “shitty” ones, are dramatically increasing in value. And yet, they are all also incredibly safe investments because, unlike other businesses, an NBA franchise will never disappear in Chapter 7 bankruptcy or decline in value to the point where you have to sell at a loss. It’s really rare to find a business with rapidly escalating valuations that is also almost entirely free from downside risk.

2. Everyone who hasn’t been living in a cave the past few years knows the NBA is going to expand into at least two new markets (Las Vegas & Seattle) in the next five years. Expansion will result in HUGE franchise fee distributions to all the existing NBA organizations. So there’s a huge pile of free money on the near horizon for any NBA owner.

3. Owning an NBA franchises can provide cross-marketing opportunities for an owner’s other businesses. An NBA franchise is another entry point into the incredibly lucrative entertainment business with stars and rapidly loyal followers. Lot’s of opportunity for really smart business people who have already amassed billions through their business acumen.

4. An NBA owner with a franchise that has operational losses can turn those losses into significant tax benefits.

5. While the Timberwolves might be fairly considered a “shitty” franchise, the team is in a great market and it’s the market that matters. The Wolves are in the Nation’s 15th largest media market. To put that in perspective, Denver is 16th, Orlando 17th, Miami 18th, Cleveland 19th, Portland 22nd, Milwaukee 38th and Vegas 40th. Therein lies the value since the NBA is driven largely by media revenue. Also, the Twin Cities has a particularly strong economy with lots of money. Minneapolis/St. Paul together are 9th nationally in the number of Fortune 500 company headquarters. Minnesota has one of most diverse and therefore resilient economies in the Country. There’s a reason David Stern intervened to keep the Wolves in Minneapolis when Glen Taylor appeared out of nowhere to buy the team. This is an attractive market for owing a professional sports franchise.

Everything ends at some point. Boxing was arguably the most popular sport in the US not too long ago. Eventually the value will go down to zero and no NBA will exist. It could be 20 years (very unlikely) could be 50, 100 or 500. We don't really know. I agree that it appears to be continuing to go up. We as people value entertainment products more and more as automation and efficiency has decreased the hours needed to work as a whole. I imagine we will continue to have more free time as time goes on and likely entertainment products will be more desirable.

[SameOldNudityDrew]

This is great news. There will be a mountain of money behind this team. Luxury tax, shmuxury tax!

No way this portents a move to NY. They already have 2 teams.

This can only be good news.

[FNG]

This is great news. There will be a mountain of money behind this team. Luxury tax, shmuxury tax!

No way this portents a move to NY. They already have 2 teams.

This can only be good news.

Pretty sure the word "portents" hasn't appeared since the ESPN board days...

While I agree with the general sentiment here that this is good news, I also think WF makes a good point above. Billionaires (and near billionaires) buy sports franchises because 1) they want to be in the game, and 2) historically they have always gone up in value...and dramatically so in the case of the NBA. But things change, and there is no guarantee that the value will continue to go up. At some point, a group of relatively new owners may find their franchise is no longer as valuable as it was when they bought it. I understand that the TV contracts prop up the values, and right now, there doesn't appear to be any lightening of demand to watch the NBA. But for an example of how quickly things change, look no further than pop music. Last summer it appeared there was no ceiling for how much fans would pay for a concert ticket (mostly Swift and Beyonce, but others too). But this summer things have changed drastically. Performers like Bad Bunny and the Black Keys have significantly cut back their planned concert dates, and Jennifer Lopez has canceled her entire summer tour. I'm not going to shed many tears if billionaires like Bloomberg end up holding the bag, but I think they're kidding themselves if they think they are going to get the kind of astronomical returns owners like Glen Taylor has gotten.

[Lipoli390]

This is great news. There will be a mountain of money behind this team. Luxury tax, shmuxury tax!

No way this portents a move to NY. They already have 2 teams.

This can only be good news.

Pretty sure the word "portents" hasn't appeared since the ESPN board days...

While I agree with the general sentiment here that this is good news, I also think WF makes a good point above. Billionaires (and near billionaires) buy sports franchises because 1) they want to be in the game, and 2) historically they have always gone up in value...and dramatically so in the case of the NBA. But things change, and there is no guarantee that the value will continue to go up. At some point, a group of relatively new owners may find their franchise is no longer as valuable as it was when they bought it. I understand that the TV contracts prop up the values, and right now, there doesn't appear to be any lightening of demand to watch the NBA. But for an example of how quickly things change, look no further than pop music. Last summer it appeared there was no ceiling for how much fans would pay for a concert ticket (mostly Swift and Beyonce, but others too). But this summer things have changed drastically. Performers like Bad Bunny and the Black Keys have significantly cut back their planned concert dates, and Jennifer Lopez has canceled her entire summer tour. I'm not going to shed many tears if billionaires like Bloomberg end up holding the bag, but I think they're kidding themselves if they think they are going to get the kind of astronomical returns owners like Glen Taylor has gotten.

I don’t think billionaires buy professional sports franchises to get astronomical returns. They buy them because it’s fun. They are play toys. Just watch Marc Lore and a-Rod court side and see how much they love being there and watching their team. Same for Marc Cuban and many others. Owning these franchises also creates or enhances other business opportunities. So the fact that NBA franchise values have been increasing dramatically is a huge bonus, but not what drives interest in ownership. Meanwhile, even if valuations don’t continue to go up dramatically or stagnate, the odds of these valuations declining are extremely remote. Of course nothing is certain. But no responsible, successful business person ever relies on certainty. They rely on probabilities and there’s a high probability valuations will continue to go up at least modestly with an extraordinarily low probability values will decline. If I had a couple billion, I would buy an NBA franchise if one was for sale. Of course I’d want to buy the Wolves, but I’d buy another franchise if the Wolves weren’t available.

[SameOldNudityDrew]

This is great news. There will be a mountain of money behind this team. Luxury tax, shmuxury tax!

No way this portents a move to NY. They already have 2 teams.

This can only be good news.

Pretty sure the word "portents" hasn't appeared since the ESPN board days...

While I agree with the general sentiment here that this is good news, I also think WF makes a good point above. Billionaires (and near billionaires) buy sports franchises because 1) they want to be in the game, and 2) historically they have always gone up in value...and dramatically so in the case of the NBA. But things change, and there is no guarantee that the value will continue to go up. At some point, a group of relatively new owners may find their franchise is no longer as valuable as it was when they bought it. I understand that the TV contracts prop up the values, and right now, there doesn't appear to be any lightening of demand to watch the NBA. But for an example of how quickly things change, look no further than pop music. Last summer it appeared there was no ceiling for how much fans would pay for a concert ticket (mostly Swift and Beyonce, but others too). But this summer things have changed drastically. Performers like Bad Bunny and the Black Keys have significantly cut back their planned concert dates, and Jennifer Lopez has canceled her entire summer tour. I'm not going to shed many tears if billionaires like Bloomberg end up holding the bag, but I think they're kidding themselves if they think they are going to get the kind of astronomical returns owners like Glen Taylor has gotten.

Sorry, in the verb form it should be "portends!" In my defense, it was really late and I was falling asleep!