NBA commissioner Adam Silver said recently the league may dust off long dormant expansion plans, igniting prospective cities and ownership groups. The prospect has league officials and current owners watching a drawn-out sales process of the Minnesota Timberwolves as an indicator for franchise value health.
After putting the Wolves on the market in both 2012 and 2015 only to back out each time, longtime owner Glen Taylor announced again in July 2020 that he was selling the team. It has not been a brisk process as firm offers have been tepid, sources said.
Taylor, 79, has gotten as far as a term sheet with a group led by Daniel Straus, a New Jersey-based health care magnate and former Memphis Grizzlies minority owner, but the sides haven't been able to finish the deal. They're still talking, sources said, and Straus remains the favorite to get the team, but Taylor's history of pulling the team off the market leaves doubt.
Valuations put the Wolves in the $1.3-1.5 billion range including debt, sources said, less than what Taylor was hoping to fetch. Straus, sources said, revised his offer after it was clear fans would not be in arenas en masse this season, assuring steeper short-term losses.
"I think Glen was hoping team values were still going up," one owner said. "I think we're finding out they may not be right now."
Within the league office, sources said officials have floated the price tag of $2.5 billion each for two expansion teams in the near future. Unlike other major revenue streams such as TV and ticket money, expansion fees are not split with players. Such a haul could mean about $160 million per team, a windfall that could wipe out the massive debt load that's piling up, and that alone has perked interest in the expansion path.
Considering there might be multiple offers from cities like Seattle or Las Vegas and that the league knows its business and its bidders, that could be a fair projection. But a potential Wolves sale of $1.5 billion or less would mean a correction in the NBA market after a decade of growth.
The Utah Jazz, who play in a much smaller market than Minneapolis, sold for $1.66 billion last month to tech billionaire Ryan Smith. That is a strong vote of confidence in the continued rise in franchise value -- but it might have been an outlier.
Smith is a lifelong Jazz fan who was desperate to buy the team. Before the Jazz came on the market, Smith had some interest in bidding for the Wolves. But like several people who reached out to Taylor since the summer, he passed.
For the past decade, Taylor has dreamed of a local buyer willing to pay a premium to ensure the team stays in Minneapolis, but he hasn't been able to find one. In recent months, ownership groups interested in moving the franchise reached out to Taylor, but he has turned them down flatly, sources said, which has limited bidders.
There was an attempt to get the Wilf family, owners of the Minnesota Vikings, interested in making an offer, but those talks didn't advance, sources said. Former Timberwolves great Kevin Garnett -- who has been in a bitter public war of words with Taylor -- expressed an interest in assembling a group, but that also hasn't advanced.
Taylor saved basketball in Minnesota, buying the team for $88 million in 1994 after it nearly moved to New Orleans. His desire to keep it in the Twin Cities is important to his legacy but is undoubtedly costing him money.
The Wolves are viewed upon as an attractive relocation franchise. The Minneapolis Star-Tribune reported in July that a 2016 lease amendment with the city-owned Target Center calls for a $50 million buyout. While that isn't nothing, in a league where teams pay upward of $10 million for scoreboards, that isn't much of a safeguard. Were Taylor willing to sell the team to a group looking to move it, he might be able to get significantly more.
The Wolves have missed the playoffs in 15 of the past 16 seasons and have routinely been near the bottom in attendance. The city and team combined to spend $145 million to renovate the Target Center in 2017 and upgraded premium seating, but that still left the 30-year-old building behind many of its competitors.
Still, it is an NBA team, and that scarcity gives it value. Even if an eventual sale comes below the Jazz's purchase price, Taylor will have made a spectacular profit. When he put the team on the market in 2012, the most recent sales of teams were in the $300-400 million range, and changing his mind then ended up being a profitable decision.
But maybe not as much as the league was hoping.