-
Brian Windhorst, ESPN Senior Writer
The Minnesota Timberwolves have been in ownership limbo for much of the past decade.
Last week, when Wolves owner Glen Taylor announced he’d voided a contract to sell control of the team to Marc Lore and Alex Rodriguez after a three-year process, it marked the third time since 2014 Taylor canceled a sale plan, all of them with different bidders.
This time, with the Wolves enjoying their best season in 20 years, the entire NBA has its eyes on Minnesota. The Wolves have rising superstar Anthony Edwards under contract for five more seasons and re-signed nearly all of his supporting cast, leaving them in position to be a contending team for the foreseeable future … if ownership can stay out of court and foot the bill.
Here are the four biggest questions surrounding what is happening in Minnesota and what it means for the Wolves on the court.
How did we get here?
In 2021, Taylor agreed to sell controlling interest in the Wolves to Lore and Rodriguez for a $1.5 billion valuation in three payments that were meant to be completed by this season. This was an unconventional way to purchase a team and turned off some suitors. But it was preferred by Taylor, who wanted to form a relationship with new ownership and gradually hand over control while keeping a piece of the franchise. It also allowed the potential new owners time to raise money.
Neither Lore nor Rodriguez are billionaires. A majority of Lore’s wealth comes from selling Jet.com to Wal-Mart in 2016, which netted him $477 million, per SEC filings. Rodriguez earned about $440 million in his 22-year baseball career, with Forbes estimating his total earnings including endorsements at $475 million.
But they had made a sweetheart deal that gave Lore and Rodriguez instant equity. Four teams have been sold since at much higher valuations: the Phoenix Suns for $4 billion, the Dallas Mavericks for $3.5 billion, the Charlotte Hornets for $3 billion and co-ownership of the Milwaukee Bucks for $3.5 billion. In December, Sportico valued the Wolves at $2.8 billion.
The group made the first two payments in 2022 and 2023, getting ownership of about 36% of the team, and announced they’d filed paperwork to buy an additional 40% for about $600 million that could gain them control of the franchise by the end of March. The two negotiated with numerous potential partners and several private equity groups in the months leading up to the deadline as they searched for ways to raise capital, sources told ESPN.
In his announcement last week that he had voided the contract, Taylor said Lore and Rodriguez hadn’t transferred the remaining money by a March 27 deadline. Lore and Rodriguez said they could’ve closed by then but the NBA hadn’t formally approved their purchase. The league hasn’t commented.
Taylor executed a clause in the purchase agreement to retain the team. Lore and Rodriguez, for now at least, will remain only limited partners with no pathway to majority ownership and no formal say on team matters.
What happens next?
In a series of interviews and statements, Lore and Rodriguez said they didn’t violate the agreement and still intend to buy the team, and that Taylor has “seller’s remorse” because the value of the team had risen so much since the initial deal. They have hinted at legal recourse but haven’t filed anything as of yet.
Taylor is a veteran of lawsuits and complex mergers and acquisitions (his Taylor Corporation once had over 80 subsidiaries) and has a legal team with a record of success.
In 2021, Taylor was hit with a lawsuit by a different aggrieved limited partner, Meyer Orbach, who claimed Taylor violated their contract because Orbach wasn’t given the opportunity to sell his shares of the team (17%) before the completion of the sale to Lore/Rodriguez. It was quickly tossed from federal court because the written agreement between the two protected Taylor. The sales agreement between Taylor and Lore/Rodriguez runs approximately 50 pages and has numerous protections for Taylor, sources told ESPN, and Taylor’s side believes it’s on firm legal ground.
In an interview with Sportico, Lore said he’d never sued anyone or been sued himself.
Taylor has been the owner since 1994, is a former chairman of the NBA board of governors and has a long relationship with commissioner Adam Silver. The league office has been aware of and consulted on the details regarding the situation. It has not taken a public stance, but unlike Lore and Rodriguez, who compared Taylor’s voiding of the sales process to a nuclear bomb in interviews, the league was not taken by surprise, sources said.
How does this affect the Wolves this summer?
This is the most relevant question for the rest of the NBA. With new contracts for Edwards, Karl-Anthony Towns, Jaden McDaniels and Mike Conley set to hit the team’s books, the Wolves are already committed to $186 million in salary for just nine players next season.
To fill out the rest of the roster even with minimum salary players, the Wolves are looking at a luxury tax bill of around $40-50 million for next season alone.
Taylor has paid a total of $25.5 million in luxury taxes in his time as Wolves owner, with less than $2 million of that coming since 2005. As these contracts were being signed and the Wolves were moving toward a financial cliff, Taylor was operating the team.
He was actively involved in talks, haggling over details on McDaniels’ $136 million extension, sources told ESPN, just last fall. On a podcast in October, Taylor indicated the sale might be delayed but that he was still operating under the belief it would happen, saying, “I ask them if they’re set and if they’ve got everything, and they say they do, so I take them for their word.
“It doesn’t make much difference to me if it’s December, March or July.”
Lore and Rodriguez had worked with Taylor on the new additions to the franchise and increased spending, including a $40 million deal to hire team president Tim Connelly in 2022 and a massive trade for Rudy Gobert later that year in which the team traded three unprotected future first-round picks and pick swaps that would’ve largely taken place during the new owners’ tenure.
When he announced the sale process was over and that he’d be keeping the team, Taylor said one factor in his decision was the fact that the roster was set up for success.
“We’ve got the players now. And it appears to me that we should have a very positive run for a number of years,” Taylor told The Athletic. “And I want to be a part of that.”
He has not yet made clear whether he’s willing to spend well beyond his previous limits. In the 2003-04 season, the last time the Wolves were legitimate contenders, Taylor paid $17 million in luxury taxes, which would be about $28 million adjusted for inflation today.
Another factor: Taylor raised about $550 million in selling shares to Lore and Rodriguez over the past three years while still retaining control of the team. This potentially puts him in position to better weather losses over the next few seasons if he chooses.
Will the Wolves stay in Minnesota?
Most likely. Taylor has made it clear over and over he will not allow the team to be sold to owners who plan to move, and he has turned down numerous offers to sell to buyers who would pay a premium to do so. He will turn 83 later this month.
In his lawsuit from 2021, Orbach revealed details of the sales agreement with Lore and Rodriguez, saying that it didn’t include an ironclad restriction from moving the team.
The Wolves have a lease with Minneapolis to play at the Target Center through the 2034-35 season. The fee to break the lease is $50 million, which is just 3% of the sales price Lore and Rodriguez agreed to pay.
The NBA requires 23 of 30 owners to approve any relocation.
The league is considering adding expansion teams in the near future, potentially making any team relocations more complicated. There hasn’t been a team move since the Seattle SuperSonics relocated to Oklahoma City in 2008.
Source: www.espn.com