Alex Meruelo's purchase of the NBA’s Atlanta Hawks and lease to Philips Arena, pending approval from the league’s owners, would be heavily financed by the current owner of those assets, Atlanta Spirit LLC.Almost makes you wish the lone blogger who made mention of it 10 weeks ago had some (any) reportorial skills, no?
According to a person with first-hand knowledge of the deal, 40% of the purchase is to be financed by Atlanta Spirit LLC for five years, which is probably why there has been so much confusion regarding how much Meruelo is paying for the money-losing team we valued at $295 million this past January.
Seller financing is unusual in sports and typically involves poorly capitalized teams. The purchase of MLB’s currently bankrupt Los Angeles Dodgers by Frank McCourt from Fox in 2004 involved considerable financing from the News Corp. subsidiary. And the sale of the NHL’s Tampa Bay Lightning in 2008 by William Davidson to Oren Koules and Len Barrie was partially financed by Davidson. Shortly thereafter Koules and Barrie sold the under-capitalized hockey team to Boston Red Sox minority owner Jeff Vinik for much less than they paid for it.
This evening, Marc Stein follows up with this report about Alex Meruelo's lack of funds to buy an NBA team (HT: Kurt Helin):
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.The Hawks are almost certainly in a bad way cap-wise regardless of the particulars of the new CBA. ASG made sure of that. The last thing this franchise needs is a cash-poor owner attempting to deal with the limitations imposed by his predecessors.
It was initially believed that the approval process was moving slowly because the NBA's resources have been largely devoted to ongoing negotiations with the NBA Players Association as part of a lockout that Wednesday reached its 117th day.
But sources indicate that the prospect of Meruelo's deal collapsing was mentioned Tuesday when the Board of Governors convened in New York to discuss revenue-sharing plans.
And the ongoing lockout did not prevent the NBA from announcing last week that the Board of Governors had unanimously approved the sale of the Philadelphia 76ers from from Comcast-Spectacor to a group led by private-equity billionaire Joshua Harris.