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It is easy to understand why, despite four straight berths to the NBA playoffs, fans of the Atlanta Hawks would be disappointed with Friday's news that Los Angeles businessman Alex Meruelo has withdrawn his bid to buy the team under concerns about his financial backing. Kris Willis of SB Nation's Peachtree Hoops explains the sentiment from the perspective of a Hawks fan who had been so hopeful when Meruelo agreed to buy the team.
Today's announcement brings much disappointment to many Atlanta Hawks fans who were looking forward to Alex Meruelo taking over as majority owner of the club. Essentially, this means more of the status quo for the team as it is doubtful that the Atlanta Spirit will move to acquire assets or dump players. They will most likely want to maintain the product as is as they evaluate what the next collective bargaining agreement looks like. In other words, there will likely be few changes and more of the same from the Hawks, who have made a habit of putting stock in the team's core pieces.
It has been pointed out many times that the Hawks aren't a bad club. But they aren't championship-caliber either. That's a difficult spot to be categorized in the NBA. Hawks fans were looking for an enthusiastic owner that would go about reshaping the franchise in his vision. That very well could have been the Atlanta Spirit Group, but infighting and questionable personnel decisions have undermined that effort from the start.
Los Angeles-based businessman Alex Meruelo will not be buying the Atlanta Hawks after all, after a hitch surrounding financial backing perked up during the NBA approval process. That means that the Atlanta Spirit group, a consortium of area businessmen and widely considered the worst owners in pro sports, will hold on to the Hawks for the forseeable future.
Or maybe forever. From the Atlanta Journal-Constitution:
"The Atlanta Hawks are no longer for sale," [ASG partner Bruce] Levenson said in a statement. "We're excited to remain as owners of the Hawks and are committed to building on our string of four straight playoff appearances."
This could be a bit of posturing to dim the bright lights of desperation that would shine after Meruelo's exit. But if it's not, if Levenson and the Atlanta Spirit really do intend on keeping the franchise hostage, then may God have mercy on Hawks' fans ... because management doesn't intend to.
Atlanta Hawks fans received a dose of bad news on Friday, as the team's sale to Los Angeles businessman Alex Meruelo has been mutually terminated, according to a report in the Atlanta Journal-Constitution. The deal, which was signed in early August, has now fallen through, according to the report.
Meruelo announced a "definitive" agreement to purchase the team on August 7, but the deal stalled during the NBA approval process. The league required the deal to include conditions that were not a part of the original agreement, the AJC reports. A 75-percent majority is required to approve any new owners, but according to the report, the league had enough issues with the arrangement that a vote never took place.
The news means that the Atlanta Spirit Group, for the time being, remains the owners of the club.
Alex Meruelo reached a deal in principle to buy the Atlanta Hawks early this offseason. But it turns out that he may not get the needed stamp of approval from the NBA, which is skeptical he has the funds to effectively operate the franchise, reports ESPN's Marc Stein.
Meruelo, who owns the La Pizza Loco chain, agreed to buy the team from the Atlanta Spirit group for an unspecific amount in August. Even then, Forbes was skeptical of the deal, reporting that the Spirit group would be financing part of the deal and that there was actually very little (if any) cash changing hands. Essentially, Meruelo would be taking on the Spirit's debt.
In a statement to ESPN, Meruelo assuaged concerns that he doesn't have the financial wherewithal to run the Hawks in a "first-class manner."
The NBA rarely denies purchasers who reach an agreement in principle with franchise owners. In fact, the NBA has approved all six bids that have come before it within the past six years.
The Atlanta Spirit group is a failed consortium of local businessmen who have bickered over the direction of the franchise for years, and are considered to be the worst ownership situation in sports, which is really something when you consider what the L.A. Clippers and L.A. Dodgers have gone through.
According to Ozanian, nearly 40 percent of the purchase price, which has been estimated at nearly $300 million, will be financed by Atlanta Spirit LLC over a term of five years. The unusual seller financing could lead to the NBA's Board of Governor's to more closely scrutinize the sale to Meruelo, who has made his fortune as a real estate developer and as the owner of a successful pizza chain, La Pizza Loca.
Meruelo is purchasing controlling interest in both the Hawks and Philips Arena, which carries over $120 million in debt, from the same ownership group that sold the NHL's Atlanta Thrashers, who were relocated to Winnipeg, Manitoba.
Despite his New York roots and California residence, Meruelo, who would become the first Hispanic majority owner in league history, plans to keep the franchise in Atlanta.
"I am committed to winning and look forward to engaging with our wonderful fans, our dedicated season ticket holders, our committed corporate partners and this passionate community," Meruelo said on Monday. "I believe that both the Hawks and Philips Arena have unlimited potential for the future. I am honored to be a part of that future"
The estimated $300 million that California businessman Alex Meruelo paid to acquire an 80-percent stake in the Atlanta Hawks and Philips Arena includes the debt on the arena, writes Michael Cunningham of the Atlanta Journal-Constitution.
According to Marc Ganis of sports business consulting firm SportsCorps, the $300 million represents the "enterprise value", which includes Meruelo assuming nearly all of the debt on the team and arena from Atlanta Spirit LLC, which purchased the operating rights from Time Warner in 2004 for $208 million.
Debt on the 12-year-old Philips Arena is estimated to be around $120 million.
Meruelo has vowed to keep the Hawks in Atlanta, and Ganis thinks a savvy businessman like Meruelo could do well in the market.
"The Hawks have been one of the lesser teams in NBA over long period of time -- with spurts of a difference -- in terms of attendance and consistent fan support," Ganis said. "That offers upside to someone who believes he has the business acumen and marketing ability to turn them around and make them more of a consistent winner and a consistent draw."
The AJC report regarding the inclusion of debt in the purchase price contradicts a report from earlier on Monday by David Aldridge of NBA.com that the estimated purchase price would not include the debt on the arena.
Alex Meruelo, the California-based businessman who has purchased the Atlanta Hawks, met the media on Monday for a brief afternoon news conference. While he didn't get into the particulars of buying the team and where he sees the roster and management structure going in the coming months and years -- on account of not yet being approved by the NBA and being under the league's lockout communication spell -- he did make one thing clear over and over: he wants to bring a championship to the ATL.
"I will never stop trying to win a championship for Atlanta," Meruelo said, while wearing a red Hawks hat.
Meruelo said he first registered interest in the Hawks six or seven months ago, but that he couldn't come to an agreement on the price with the Atlanta Spirit group. The Spirit then entered exclusive negotiations with a bidder, but that fell apart in recent months. At that point, Meruelo came back to the table and worked out an agreement. NBA.com's David Aldridge has reported that the pricetag came in over $300 million, not including substantial debt that Meruelo will assume.
Meruelo said his brief time in Atlanta has been enjoyable, and that he looks forward to monitoring the Hawks up close in coming season.
"That southern hospitality is very true," he said. "I feel it."
On why he went ahead with the purchase despite labor uncertainty and an ongoing lockout of players, Meruelo said he believes in the NBA's future.
"I just see a tremendous amount of opportunity and growth in this sport," he said.
David Aldridge of NBA.com and TNT is the first to report a figure on the sale of the Atlanta Hawks to California businessman Alex Meruelo: Aldridge's source claims a sale price in excess of $300 million for the Hawks and Philips Arena, which doesn't include a good deal of outstanding debt Meruelo will assume. (The Atlanta Spirit group owes a reported $120 million bonds on Philips; that debt is repaid with a portion of arena revenue.) Depending on how Philips, a 12-year-old building with a strong reputation in terms of condition and amenities, is valued, that appears to be a hefty pricetag for a mid-rung team with historically iffy attendance.
The Atlanta Spirit group bought the Hawks for $208 million in 2004.
Recent sales of NBA franchises have been mixed in terms of prices. The Golden State Warriors went for a record $450 million, while the Charlotte Bobcats were bought by Michael Jordan for less than $300 million. The Detroit Pistons, New Jersey Nets and Philadelphia 76ers were also reported to come in under Forbes valuations.
Meruelo has insisted he will not relocated the Hawks, and doing so would prove mighty expensive regardless.
The Atlanta Hawks will have a 2 p.m. press conference on Monday afternoon to announce the pending sale of the team and Phillips Arena to California businessman Alex Meruelo, the team announced. The press conference will be streamed live on Hawks.com, for those interested in checking it out.
Meruelo is the seventh new owner to join the league in the last two years, and is its first Hispanic owner. There was initially a concern that he might think about moving the team to Anaheim, but the debt he will assume, as well as the NBA's relocation fee, makes that next to impossible. The sale is pending owners' approval, but all indications are it will be approved sometime in 2011, depending on the trajectory of the NBA lockout.
Alex Meruelo has agreed to buy the Atlanta Hawks ... during the NBA lockout. Is he crazy? Plus: what to do about the sham FIBA Oceania region.
Given recent high-profile relocations in the NBA and in Atlanta -- the NHL's Thrashers moved to Winnipeg this offseason -- folks in Georgia may be understandably concerned that the Hawks, purchased by California businessman Alex Meruelo, may be moved to Anaheim. But according to SB Nation Atlanta's Phil Foley, relocation will prove mighty expensive if it's sought.
Meruelo says he has no plans to move the Hawks, and it's hard to imagine that the NBA would want to leave a market like Atlanta, especially considering that Philips Arena is just 12 years old and remains competitive with newer buildings in terms of amenities.
But, as Foley describes, the costs of relocation would likely be prohibitive.
[U]nder the terms of the new bond agreement, the Hawks cannot leave Philips Arena for at least seven years even if they pay off the bonds in their entirety. If the Hawks do leave, there's a $75 million "early termination penalty" that the Spirit or the new owners that want a team elsewhere would be socked with. [...]
[The team] could theoretically pay off the remaining $123.5 million in bonds off tomorrow and the Hawks could leave, but they cannot leave until the 2018-19 season at earliest without also forking over another $75 million in addition to the $123.5 million or so left remaining on the bonds.
Even that is an incomplete pricetag: the NBA has a relocation fee that is decided by the other 29 owners. The last time a team relocated, in 2008, the Oklahoma City Thunder had to fork over $30 million. The L.A. Lakers and Clippers threatened to push for a painful relocation fee when the Maloof family attempted to move the Sacramento Kings to Anaheim last season. The costs of relocation could easily exceed the value of the franchise.
That makes relocation -- to Anaheim or anywhere -- pretty much untenable. So sleep easy, Atlanta.
When California businessman Alex Meruelo officially becomes the next owner of the Atlanta Hawks -- provided he passes the NBA's review process, which few fail -- he will be the league's seventh new franchise owner in just the past two seasons.
Six teams -- the New Jersey Nets, Washington Wizards, Detroit Pistons, Charlotte Bobcats, Golden State Warriors and Philadelphia 76ers -- have been officially sold since the start of 2010. The NBA review process can be lengthy, but you'd expect the Hawks sale to likely go through by the end of 2011. That's some amazing (and unprecedented) turnover for the league.
As SB Nation's NetsDaily notes, three more franchises have seen new generations of owners begin to handle the load: Josh Kroenke with the Denver Nuggets, Jim Buss with the L.A. Lakers and Greg Miller with the Utah Jazz, who took over that franchise when his father Larry passed away.
How this incredibly new class of owners affects the trajectory of the league remains to be seen.
With the news that the Atlanta Hawks have been sold to a non-local, California businessman Alex Meruelo, Atlanta fans might worry about losing another team to relocation, much as they lost the Atlanta Thrashers to Winnipeg. But Meruelo told the Atlanta Journal-Constitution he wants to bring an NBA championship to Atlanta.
Telling the AJC's Mark Bradley "I will be in complete control of the team," Meruelo, who stands to become the NBA's first Hispanic owner, began his tenure as the next Hawks owner by doing the sort of public relations work that gets sports columnists on the owner's side. Bradley compares him favorably to the Liberty Media group that runs the Atlanta Braves, and the conversation is written up in glowing terms.
In that respect, it certainly seems like all will be well in the Hawks' proximate future. But this is the sort of enthusiasm virtually every person buying a professional sports franchise shows at the outset: one can't help but wonder if it's a pose calculated for maximum benefit down the road.
Just a couple of months after the Atlanta Spirit Group sold the Atlanta Thrashers to owners who moved the franchise to Winnipeg, it appears that they have also successfully found a buyer for the Atlanta Hawks. According to an Associated Press report, the buyer is California businessman Alex Meruelo, who is the operator of successful pizza chain La Pizza Loca.
In case you were wondering, the Hawks will not suffer the same fate as the Thrashers and get shipped out of town. Atlanta is a very important market to the NBA, and they're much more interested in improving the lackluster product than they are in moving to another locale. With a large population, lots of people with money, and now no major winter competitor for peoples' hard earned dollars, the Hawks have a lot of room for growth, which is probably what makes them such an attractive investment proposition for Meruelo.
The potential sale of the Atlanta Hawks to an unknown bidder is moving forward quickly, report Chris Vivlamore and Tim Tucker of the Atlanta Journal-Constitution (via Pro Basketball Talk). News broke in June that the Atlanta Spirit group had found a potential buyer for the club, but the identity of the bidder has remained a secret, improbable as that may seem.
The Atlanta Spirit group recently sold the NHL's Thrashers to a Winnipeg-based group; the NHL quickly approved relocation out of Atlanta. The Hawks won't be moved, though: Atlanta is too important a market for the NBA, despite lousy crowds at Phillips Arena over the years.
While a purchase price remains to be seen, that plenty of millionaires are willing to buy into the NBA as the league argues it is unprofitable is a bit amazing, and adds another layer of complexity to lockout negotiations. The Philadelphia 76ers are currently being sold to a billionaire investor, and a number of teams have changed hands in the past two years.
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