Michael Jordan reportedly in significant
talks to Shell and sell a majory
share of the Charlotte Hornets here to
discuss that from the sports Business
Journal marketing analyst Derek Moss.
Derek, thanks for joining us.
I guess my first question is.
Is this something that is likely to happen?
I mean, Jordan's camp basically saying they
don't comment on speculation or rumors,
but this is now out there and is
being put out there by the NBA's
really top reporter, Adrian Wojnowski.
So it does make sense that
he would be looking to sell.
I think about a month ago when e
Phoenix Suns transaction was finalized
and that franchise sold for $4 billion.
I think you could really see the writing
on the wall that now is a great time to
be an owner and a great time to sell.
So if you think about it,
he bought that team almost 13 ys
ago to the day from today and he
paid $275 million for it at the
time if he can make upwards of.
$2 billion, then you're talking
about 7 times what he paid for .
So there are a few investments in life.
They're going to pay that kind of dividend.
Yeah, you mentioned the Suns,
and we've also seen the Bucks
change hands as well recently.
Why? Is this a good time to
sell an NBA team or or buy one?
So it is a good time.
So valuations of team franchises
in all sports really have
gone up a lot in recent years.
And if you think about the
way owners make money,
it's not really the cash flow and the
revenue that comes in from the day-to-day,
it is in that value of the franchise.
So let's think about how much money that say,
the commanders are going to fetch when
Dan Snyder, if he eventually se,
he's going to make so much money
back on his initial investment.
Uh, if, like the Phoenix Suns,
you actually own your arena and that's
part of the deal that plays into this.
So with Jordan,
I think it's just a situation
where he may be cashing out at
the time where he's going to hae
the most return on his investme.
And that's how people in in the
sports business look at this is,
where's my investment going to
pay off the most?
So let's look at the Hornets specifically.
I mean on the court they've been
inconsistent, you know probably below
average the majority of the time that
Jordan has owned the team off the court
business wise they seem to do w.
Is this a good business for somy
to be to be buying right now?
Right. Well, there are a lot of things
the Hornets do have in their fa.
You know, the spectrum center,
even though they do not own it,
they're the operator.
That facility is really still
a very good facility as far
as national NBA facilities go.
There are a lot of events there.
The upgrades will be taken
care of by the city.
You're building the new training
facility right across the stree.
That is a point that is going
to score well with investors.
So I mean, I think that the fact
that they have not been able to
maybe lure any of the top playe,
fans are always going to be aware of that.
They haven't had great success in the draft.
Beyond mellow.
So you know,
I think now though a new owner coming in,
you're going to have a top draft pick,
you're going to have a new training facility,
you've got a solid lease at
your facility through 2030.
So there's a lot to like as a
new potential owner coming in.
And as you know,
it's not going to be strangers,
the new people,
the new ownership group looks
like it's going to be going to
include some of the current
minority owners of the Hornets.
So if there's a chance,
this could be a pretty smooth.
Transaction and we just see a nw
ownership group come in and thee
may not be a whole lot that cha.
Talk to you about that new group in a moment,
but I did want to ask one more, you know,
question about Michael Jordan because.
It's a rare it's a rarity to hae
a team owner in major sports tht
has the background, the you kno,
the the pull, the image and icoc
image that Michael Jordan brings. So.
What do the Hornets lose and what does
the NBA lose if Michael Jordan o
longer the majority owner of the team?
I think this is probably worse
news for the NBA than it is for
the Hornets and Hornets fans.
I think the NBA will be unhappy to see,
you know, the arguably the greatest player,
the most popular player in leage
history they had as part of ther
ownership and now he's not there anymore.
Another thing that will factor o
this is that Jordan was the only black
franchise owner in the NBA and so the
league can't be too happy about losing that.
So I think there are some
things that the league.
Level that they're going
to be concerned about.
I do think for Charlotte you'll still
be able to keep things like the jump.
Man. I don't think that much
is actually going to change.
You might make even the case tht
Michael Jordan has been more
involved in motor sports in the
last couple of years than he has
even been for the NBA team.
So I I feel like Charlotte will
probably be fine with this.
I think the NBA is the OR the people who
are kind of bringing hands right now.
Let's talk about the two men connected
to this sale in its most major ,
and I think we'll have a lot moo
say about Gabe Plotkin in a mom.
But what can you tell us about Rick Schnall,
who is currently minority
owner of the Atlanta Hawks?
Two guys who come from the prive
equity and venture capital worl.
So they are smart about their investments.
I was reading up a little
bit on what they do.
Like a lot of folks in sports,
they are very data focused.
They don't make decisions withot
crunching all the numbers.
So you can be sure that even though we
think you know I've seen estimates on
the Hornets going for one point seven,
$1.9 billion, whatever that
number is eventually going to b,
they will have vetted that to t.
5th degree and made sure that
it's a a good investment.
So these guys are smart with their money.
They're veterans of the NBA,
so they know the league.
I think that will be important
because sports is still a very h
a relationship based industry ao
they have a lot of those relationships
that I think are going to benefit them.
So I actually think that this nw
ownership group like I said could be a
pretty smooth transition for Charlotte.
Gabe Plotkin I mean,
as soon as people heard his name they
reference his connection to the GameStop.
Short reading about it looks
like he did take massive losses.
Is it? Can you quickly summarize
what happened there?
And and people are wondering how
is he even in a position to take
a majority position in a team.
Well, one thing I've learned in 14 years
of working at Sports Business Journal,
money just seems to pop up out f
nowhere when people need it. I ,
you know we came out of this era where.
Financing was extremely easy
because of low interest rates.
There was you know free money
moving around all over.
So I think you know we can look
at a lot of businesses that.
You know, may lose giant sums of
money over short periods of tim,
but that longer trajectory in sports,
especially your investments
are going to pay off.
So if Michael Jordan paid 275,000,000
for the Hornets 13 years ago and he's
going to make 2 billion on the return,
well that's more than seven
times your investment.
There are very few things in this world
they're going to pay off like t.
So for now,
sports is still a very safe investment.
I think the two things that I
think will affect all pro sport.
Going forward that are worth monitoring,
one is I believe more of a short
term transition as we move away
from linear TV to streaming.
So you've seen the problems with
the RSN's Bally sports undergoia
bankruptcy and we're going to he
some reshuffling of NBA and NHLd
Major League Baseball meteorite.
So I think that will be somethig
to really worth,
really worth looking at in the next few
months and years, I think long .
The bigger existential crisis fr
sports is how do we keep young s
engaged with shorter attention spans,
the people staying at home to wk
and not moving around maybe as .
I think all of sports has some questions
about how do we retain younger ?
NBA probably has a leg up on
some of the other leagues,
but I do think those two issues
are things that every ownership
group is going to have to look .
How much money am I going to make for media,
and how do I make that work?
And how do I transition to thisw
streaming media economy and stil
make the money that I was making with
these fantastic meteorites that we've
seen over the last several year?
The NBA, by the way,
is close to signing more media
agreements in the next couple of years,
so they're probably in better se
than some of the other leagues.
But I do think that will be something
that the leagues are really paying attention,
they're going to be smart about.
And final question about this
potential sale of the Hornets.
The Sun sale seemed to go pretty
quickly from an outside perspec.
Obviously there was a lot of
negative PR with the franchise,
the previous owner and and the league.
Maybe that ushered it along.
When we're hearing about
this now being, you know,
insignificant talks maybe heating up,
what's kind of the timeline for
a sale like this do you think?
Uh, yeah, that's hard to say.
I don't really have a whole lotf
insight into the details of thi.
I know that the Jordan camp is really
not talking about it now, but you know,
just looking at kind of all the
outside things that are going o,
the timing is right to sell the franchise
and cash out potentially while e
value is at where it is right n.
Like I said that Phoenix Suns,
when that when the sun sold for $4 billion,
I think about the Clippers just not that
long ago there was a $2 billion sale.
Uh, so the valuations of franchs
are skyrocketing and it may juse
that Jordan feels like now I can
maximize my investment and maybe
now is the time is right.
So I think this was purely a business
decision and I think Charlotte s
well positioned to withstand th.
I think Charlotte is such a
growing local economy.
You have this incredible base
of financial institutions that
offer sponsorship opportunities,
great facilities in Charlotte, .
I don't think Charlotte has a lt
to be worried about from sort
of a from the fans perspective.
Like I said,
I think the NBA's just going to
be disappointed to losing a very
high profile manager,
but my prediction is we're goino
see him a lot more in Motorspor.
Yeah, he's been heavily involved
2311 and might be closer to a
championship with that team than
the Charlotte Hornets right now.
Derek Moss from the sports Business Journal.
Thanks for joining us to talk
about this. Thanks a lot.