Minnesota Timberwolves and Minnesota Lynx controlling owner Glen Taylor and minority owners Marc Lore and Alex Rodriguez are scheduled to go to arbitration this week as the fight for control of ownership of the teams enters a new phase. phase.
The hearing is expected to last most of the week and a decision is expected in December, Timberwolves sources told ESPN. The contract between the parties calls for a panel of three arbitrators (one selected by each party and one neutral arbitrator) to hear the case and decide, sources briefed on the process said.
The arbitration decision is binding, but the case to determine who will ultimately own the teams remains a complicated situation with a murky outlook.
With the hearing scheduled to begin Monday, here is the latest information on the status of the case:
What will the arbitration hearing decide?
At issue is a deadline that Taylor determined Lore and Rodriguez missed to close the deal in March. Lore and Rodríguez believe they complied with the terms outlined in the sales agreement, giving them the option of additional time.
In 2021, Lore and Rodriguez agreed to buy the Wolves and Lynx from Taylor at a valuation of $1.5 billion. At Taylor’s request, the sales agreement established a three-stage schedule. The first two occurred in 2022 and then in 2023, when Lore and Rodríguez bought 36% for approximately $600 million in total. The deal required them to pay an additional $600 million to control about 80% by the end of March.
Taylor, owner of the Wolves since 1994 (and the Lynx since its inception in 1999), halted the sale on March 28 because he said Lore and Rodriguez missed a deadline for final payment. In interviews he also cited the team’s potential as a championship contender as a factor. Lore and Rodriguez have said in interviews and documents that they had the cash to complete the deal, but the nba delayed its approval of the transaction and therefore they were entitled to an extension.
The two sides will present their cases this week.
Will the referees’ decision determine who gets the teams?
Not at all. This is the most important question to understand.
If the arbitrators rule in favor of Taylor, he can end the process. He will have voided the sale and will remain the majority owner. He has said that he will not put the team up for sale again, but nothing will stop him from doing so.
If the arbitrators rule in favor of Lore and Rodríguez, Taylor would be contractually obligated to sell them the majority stake at the previously agreed upon valuation of $1.5 billion. However, all team percentage transfers are subject to a vote by nba owners. Lore and Rodríguez would need 23 of the 30 votes to be approved as new owners. Only then would they get the equipment.
Is it possible that nba owners will not approve the purchase if Lore and Rodríguez win?
This is the question that is perhaps most intriguing.
Taylor is a former chairman of the nba Board of Governors and has a long personal history with nba Commissioner Adam Silver.
Throughout nba history, there have been occasional disputes over sales of nba teams, but rejecting a forced sale agreement because the current owner changes his mind would be unprecedented, especially since Lore and Rodríguez have already been approved as limited partners and double the time. nba owners ratified percentage transfers.
Silver has said the league is not currently involved in the process and is allowing arbitration to take place.
“That is a process that exists independently of the league that was established in the sales agreement…depending on the outcome, only then would the league continue an ownership investigation process,” Silver said in September. “There are pencils in the league office. [until then]”.
But behind the scenes there has already been a lot of maneuvering, multiple sources told ESPN, knowing that this vote could be coming.
Over the past six months, Lore and Rodriguez have tried to shore up their financial situation by recruiting billionaires Michael Bloomberg, the former mayor of New York, and Eric Schmidt, the former CEO of Google, to become partners. Additionally, private equity firm Dyal Homecourt Partners, an approved nba partner that currently owns parts of the Phoenix Suns, Atlanta Hawks and Sacramento Kings, has also secured a position.
As a result, Lore and Rodriguez raised $950 million and have it in an escrow account and made it clear in documents that they plan to offer to buy out Taylor and his partners for the remaining 64% of the teams, the sources said. Not only the additional 40% required by the disputed contract.
Additionally, the group will provide evidence of $200 million in working capital to demonstrate to referees and other owners that the group is in a position to finance the team’s operations in the future, the sources said.
With a current payroll of more than $200 million and an estimated luxury tax bill of $96 million more, the Wolves are forecast to suffer large operating losses this season, sources told ESPN. He was a factor in the team’s recent trade of star Karl-Anthony Towns.
Taylor has the $600 million, raised by selling the shares to Lore and Rodríguez, in his coffers to finance the teams. Lore and Rodriguez have worked to meet with owners and the league office in recent months to demonstrate their position and try to drum up support in the event of a vote, sources told ESPN.
This potential high-stakes vote is unlikely to actually come down to a roll call vote among owners. Silver and Larry Tanenbaum, chairman of the board of governors and president of Maple Leaf Sports & Entertainment, which owns the Toronto Raptors, would likely lead a process to reach consensus, with the body acting together. However, it is still possible that it will come to a vote, and it could take some time for it to play out if Lore and Rodriguez win in arbitration.
Is there a possibility of an agreement?
One is always possible.
However, a one-day mediation between the sides in the spring did not yield any progress, the sources said.
Lore and Rodriguez made a deal that could prove to be very shrewd if they can win this battle and close it out. Over the past year, the Wolves have been valued at $2.9 billion by Sportico and $3.1 billion by Forbes.
These numbers are influenced by recent team valuation sales, including those of the Suns ($4 billion), Dallas Mavericks ($3.5 billion), Milwaukee Bucks ($3.2 billion) and Charlotte Hornets ($3 billion). ).
Landing the team at a valuation of $1.5 billion would potentially create instant 10-figure equity in Lore and Rodriguez’s ownership shares. By the same token, Taylor has every reason to fight to retain the 40% stake he had previously agreed to sell at a price that is now well below the perceived market value, in addition to his desire to maintain control of a contending team. . .
What else is at stake?
Perhaps the future of valued team president Tim Connelly.
In 2022, the Wolves lured Connelly away from the Denver Nuggets in a five-year, $40 million deal that was instrumental in turning around the team’s fortunes.
The deal contained an opt-out clause last summer because that was when the transfer of ownership was supposed to be resolved. When that didn’t happen, Connelly agreed to postpone the opt-out until the summer of 2025. Regardless of how the next few months play out, he is potentially a coveted free agent.
