Houston Rockets Sold for $2.2 Billlion

[Herman Cain]

The Houston Rockets were sold for $2.2 Billion
http://nypost.com/2017/09/05/texas-billionaire-purchases-houston-rockets-for-2-2-billion/

Houston was lucky enough to have a local willing to pay top dollar and keep the team in town. I think it is possible that in 5-7 years the Bucks are sold and also likely it could be to someone who is looking to move the franchise.  The Bucks ownership could swallow the liquidated damages clause in the arena contract and still come out far ahead in a sale scenario.

[wadesworld]

Back to this hey?

[GooooMarquette]

The Houston Rockets were sold for $2.2 Billion
http://nypost.com/2017/09/05/texas-billionaire-purchases-houston-rockets-for-2-2-billion/

Houston was lucky enough to have a local willing to pay top dollar and keep the team in town. I think it is possible that in 5-7 years the Bucks are sold and also likely it could be to someone who is looking to move the franchise.  The Bucks ownership could swallow the liquidated damages clause in the arena contract and still come out far ahead in a sale scenario.

With the exception of the Packers and a handful of other pro franchises, that is always a possibility.  When cities like Seattle, New Orleans, St. Louis and of course Los Angeles see teams come and go at the drop of a hat, teams are constantly at the mercy of their owners...who of course are looking for the best ROI.

[muwarrior69]

The Houston Rockets were sold for $2.2 Billion
http://nypost.com/2017/09/05/texas-billionaire-purchases-houston-rockets-for-2-2-billion/

Houston was lucky enough to have a local willing to pay top dollar and keep the team in town. I think it is possible that in 5-7 years the Bucks are sold and also likely it could be to someone who is looking to move the franchise.  The Bucks ownership could swallow the liquidated damages clause in the arena contract and still come out far ahead in a sale scenario.

So what is the problem?  MU will have a modern state of the art arena for themselves. Sounds like a win for MU.

[jsglow]

So what is the problem?  MU will have a modern state of the art arena for themselves. Sounds like a win for MU.

Yep.  What I don't recall is if a lease buyout would essentially compel repaying the $250M in public money.  Trust that and more.

[GGGG]

Herman is also missing a key point.  The value of an NBA franchise is mostly set on their arena situation and their television deals.  Yeah certain franchises are more valuable due to their brand, but why would a respective owner buy out the Bucks for a discount and move them to a location like Seattle if they have to pay a significant financial penalty?  It would be more lucrative for that owner to keep the team in Milwaukee. 

[jesmu84]

Is Herman formerly Jackie Moon, MUFNY, Texas Western?

Or someone different?

[HouWarrior]

Fertita had bid on Rockets when Les Alexander bought them in the early 90s and was out bid by Les by 84 million to Tillman's 80 million.

This time ...local Gulf States Toyota  owner (holder of the naming rights on the Toyota Center) was reported to have gone north of $2 billion very early on in the private bidding...so I guess Tillman wanted to ensure he wasnt a bridesmaid again..popping for $2.2 billion.

[tower912]

Is Herman formerly Jackie Moon, MUFNY, Texas Western?

Or someone different?

Yes, yes yes.

Oh, he is very different. 

[MU82]

9-9-9!!!

[4everwarriors]

Mastros is solid, ai na?

[Herman Cain]

Herman is also missing a key point.  The value of an NBA franchise is mostly set on their arena situation and their television deals.  Yeah certain franchises are more valuable due to their brand, but why would a respective owner buy out the Bucks for a discount and move them to a location like Seattle if they have to pay a significant financial penalty?  It would be more lucrative for that owner to keep the team in Milwaukee.

Here is the math :New owner pays 2.2 Billion as part of deal old owner pays liquidated damages of approximately .5 bill equals net 1.7 less 500 purchase price equals 1.2 pre tax profit. This assumes new owner has sweet heart deal on lease in new location.

If this scenario happened it could possibly be a good thing for MU as there would be no competition for dates.

[GGGG]

Here is the math :New owner pays 2.2 Billion as part of deal old owner pays liquidated damages of approximately .5 bill equals net 1.7 less 500 purchase price equals 1.2 pre tax profit. This assumes new owner has sweet heart deal on lease in new location.

You're a bad businessman.

Why would the Bucks owners agree to pay liquidated damages?  They would sell for $2.2B and make the new owners figure it out.  And if you are the new owners, why would you shave about 20% off the value of your investment immediately when you already have a sweetheart arena deal in place?

There is no scenario that makes those damages worth it right now. 

[cheebs09]

My thinking on this may be a little naive, especially due to the amount of money other owners would get from a relocation fee. However, I can't see Silver allowing a team to move after putting an ultimatum on a new stadium, the tax payers coming through, and then moving the team 7 years later.

[wadesworld]

Discussing anything MUFNY says as serious is always a mistake.  The Bucks are going nowhere fast.

[Herman Cain]

You're a bad businessman.

Why would the Bucks owners agree to pay liquidated damages?  They would sell for $2.2B and make the new owners figure it out.  And if you are the new owners, why would you shave about 20% off the value of your investment immediately when you already have a sweetheart arena deal in place?

There is no scenario that makes those damages worth it right now.

This is how economics of the deals are done in the real world. The papering of it may look different. That is ,purchase price would be reduced by liquidated damages etc

Bucks make very little money operating the business. The only value in a sports franchise is value of franchise increasing.  The Bucks owners will not hold franchise for length of bond financed by state authority. No economic interest in doing that.

They will hold through the time it takes to get an all star game and get the majority of the real estate permitting in place . When that is in place they will evaluate alternatives. Making 2.5 times fully leveraged money in 7 years is not a bad real estate return.

Silver would love to see the Bucks go someplace else. Politically he had to give Kohl the opportunity to dictate the direction. The new owners are transient money guys who will always go with the best deal.

[GGGG]

It's not a real estate deal and shouldn't be judged as such. You don't know what you're talking about Herman.

[🏀]

It's not a real estate deal and shouldn't be judged as such. You don't know what you're talking about Herman.

+1. Not even a Bucks fan and he is way off.

[Herman Cain]

It's not a real estate deal and shouldn't be judged as such. You don't know what you're talking about Herman.

The Arena is a real estate deal. Textbook. The Bucks are an operating franchise deal. Textbook. The two deals are inter linked because the Bucks have a lease on the arena. There is a provision to de link these two elements of the deal that is what I refer to as the liquidated damages. When the value of the de linked elements is significantly greater than the value of the linked elements then the owners will de link and realize the value. This is how the Bucks owners have made their living over many years. I have dealt with these guys and many more like them. This is exactly how they operate. 

I am not saying the Bucks are going anywhere today  tomorrow or  next year.  The time frame will be as I outlined, get the All Star game and then get the permitting in place for the related real estate projects which is how they sold the government on getting the bonds put in place.

Who knows Maybe a true local multi Billionaire may emerge and buy the franchise when they sell and keep it in Milwaukee.  The odds are more in favor of someone from out of town that the NBA favors.

[wadesworld]

The Arena is a real estate deal. Textbook. The Bucks are an operating franchise deal. Textbook. The two deals are inter linked because the Bucks have a lease on the arena. There is a provision to de link these two elements of the deal that is what I refer to as the liquidated damages. When the value of the de linked elements is significantly greater than the value of the linked elements then the owners will de link and realize the value. This is how the Bucks owners have made their living over many years. I have dealt with these guys and many more like them. This is exactly how they operate. 

I am not saying the Bucks are going anywhere today  tomorrow or  next year.  The time frame will be as I outlined, get the All Star game and then get the permitting in place for the related real estate projects which is how they sold the government on getting the bonds put in place.

Who knows Maybe a true local multi Billionaire may emerge and buy the franchise when they sell and keep it in Milwaukee.  The odds are more in favor of someone from out of town that the NBA favors.

Is this one of those things where you start believing something if you tell it to yourself enough times?

I wonder what types of people Gus Ganakas has dealt with.

[Herman Cain]

Is this one of those things where you start believing something if you tell it to yourself enough times?

I wonder what types of people Gus Ganakas has dealt with.

When it comes to economics you are in over your head.

What I have describes is how the world of financial arbitrage works.

For now MU has a good deal on the arena. It may in fact MU' position  may get better if the Bucks owners decide to realize the value.  So in some respects I hope the Bucks owners go that route. Either way I think MU is in a good position which is all I care about.

[wadesworld]

When it comes to economics you are in over your head.

What I have describes is how the world of financial arbitrage works.

For now MU has a good deal on the arena. It may in fact MU' position  may get better if the Bucks owners decide to realize the value.  So in some respects I hope the Bucks owners go that route. Either way I think MU is in a good position which is all I care about.

AKA "I've never actually worked with the Bucks owners or anyone like them, but I'll continue to post on Scoop as though I exchange emails with them every other day at work."

[Juan Anderson's Mixtape]

In addition to annual lease payments, the arena is expected to generate revenue for both the WCD and state from a $2 ticket surcharge on all arena events, while the city, county and state will all benefit from an estimated $634 million in income tax revenue over the life of the lease from Bucks players and staff, as well as those from visiting NBA teams. The lease also includes a non-relocation agreement between the Bucks and the WCD that ensures the team will play all its home games in Milwaukee for the next 30 years."

http://www.nba.com/bucks/milwaukee-bucks-and-wcd-finalize-arena-lease/

[wadesworld]

In addition to annual lease payments, the arena is expected to generate revenue for both the WCD and state from a $2 ticket surcharge on all arena events, while the city, county and state will all benefit from an estimated $634 million in income tax revenue over the life of the lease from Bucks players and staff, as well as those from visiting NBA teams. The lease also includes a non-relocation agreement between the Bucks and the WCD that ensures the team will play all its home games in Milwaukee for the next 30 years."

http://www.nba.com/bucks/milwaukee-bucks-and-wcd-finalize-arena-lease/

Forget the contract. MUFNY has dealt with these owners and many like them aplenty. The Bucks will be in Seattle by the time MU needs to renegotiate its lease.

[GGGG]

I am not saying the Bucks are going anywhere today  tomorrow or  next year.  The time frame will be as I outlined, get the All Star game and then get the permitting in place for the related real estate projects which is how they sold the government on getting the bonds put in place.

Your initial post said 5-7 years.  I think there is a zero chance that the Bucks will be relocated in 5-7 years.  I would even say that the chance is darn near zero that they are going anywhere in the next 20.

NBA relocations are pretty rare.  There has only been three in the last 32 years.  And there are franchises playing in much worse situations than the Bucks are in right now.