Minnesota billionaire Glen Taylor sat in his usual seat at Target Center on Wednesday, next to the Timberwolves' bench.
Baseball star-turned-investor Alex Rodriguez and billionaire tech entrepreneur Marc Lore sat on opposite sides of the court.
The three team owners may agree that they root for the Minnesota Timberwolves, a team that just made its second appearance in the NBA's Western Conference finals, but their business relationship has deteriorated.
The simmering feud between majority shareholder Taylor and Rodriguez and Rolle comes as a result of the collapse of a $1.5 billion sale, one of the most unusual transactions in recent major league sports history.
The ownership sides are scheduled to meet soon for mandatory arbitration in a closed office in Minneapolis as the Wolves seek to reach the NBA Finals for the first time in the franchise's 35-year history.
Roa said he and Rodriguez will “use every avenue” to fight to get the deal done and acquire control of the Timberwolves and Lynx. Since the deal was signed in 2021, the combined value of the teams has increased 87% from $1.57 billion to $2.9 billion.
At stake is not only the potential financial loss running into millions of dollars, but the future of one of the league's most promising young teams.
The Beginning
Taylor, 83, has owned the Timberwolves since purchasing them for $94 million in 1994. He later went on to own the Lynx, who won four WNBA championships. Taylor, who also owns the Star Tribune, began considering a takeover bid in 2020. Several bidders came forward, including former Grizzlies minority owner Daniel Strauss and a group led by former NBA players Arron Afflalo and Kevin Garnett, but no agreement was reached.
By April 2021, Taylor had found a buyer, agreeing to sell the Timberwolves and Lynx to Lore and Rodriguez's joint venture, Purple Buyer Holdings, for $1.5 billion. Taylor previously said the sale was finalized within days. According to the Star Tribune, the couple discussed the deal in person at their Florida home, where his wife, Becky Mulvihill, cooked everyone burgers and banana cream pie.
A few months later, in July, the NBA's Board of Governors first approved the pair's purchase of a 20% stake in the team.
Lore and Rodriguez tried to buy the New York Mets for $1.7 billion in 2020 but lost out to billionaire hedge fund manager Steven Cohen.
Appearing as a guest on a recent episode of the Bloomberg podcast co-hosted by Rodriguez, Rolle said Minnesota's “underdog” story is what drew him to the team.
Rodriguez said Taylor handled all the negotiations and set the terms and price. Taylor has previously said it was Rodriguez and Lohr's idea initially for him to hold control until 2023.
“They said, 'You need to learn basketball. We want you to stay here for a while and help run the operation,' and then you'll be rotated,” Taylor said.
Experts say the installment payment arrangement itself was odd to begin with.
NBA Commissioner Adam Silver said in April that the league may reconsider whether to approve such a structure in future deals, given how the deal has played out over the years.
“Any staged transaction like this is never ideal,” Silver said. “So from that standpoint, it was within our rules, and it was what Glen Taylor wanted and what they agreed to at the time. But once the dust settles on this transaction, we may reconsider what kind of transactions we should allow.”
Deal Structure
According to an investment banker who works for a high-end firm serving the professional sports industry and who asked to remain anonymous, most sports deals, especially those involving the purchase of a controlling stake in a team, close in about 60 days but never longer than six months. Buyers pay a deposit that lapses if they miss a key deadline. The funds are usually transferred in a lump sum, and the buyer transfers it to the seller after getting approval from the league.
He called the Timberwolves-Lynx deal “unusual.”
There are several reasons why a buyer might agree to buy a team in installments, he says. First, they might need time to raise funds. Second, they need to learn more about the business before taking over, which was clearly the case with Roa and Rodriguez. A seller might choose to pay in installments because each payment could be worth more than the last. Or they might still be attached to the team and not want it to suddenly disband. Finally, it could be an opportunity to defer taxes.
For Taylor, it may have simply been about seeing the potential of younger investors who were more relationship-oriented and looking to “breathe fresh air” on the business side of the team, the banker said. Taylor had previously said another bidder offered $2.5 billion but would move the team to Las Vegas.
During this time, Lohr and Rodriguez were often seen shaking hands and hugging each other in the middle of the court with Taylor after games.
“You might sell it to a nice person a little cheaper because you like that person and you want the community to think you sold it to a nice person,” the banker said.
The collapsed place
Roa and Rodriguez were scheduled to make the third and final installment to Taylor by March 27, increasing their ownership stake in both franchises from 40% to 80%. But a week before that, investment firm Carlyle Group decided not to go ahead with a deal that would have provided the pair with structuring financing to help them make the next payment.
Questions arose about whether a deal could be reached. Roa and Rodriguez said they had filed paperwork with the league on March 21 to become controlling owners.
The day after the March 27 deadline, Taylor released a statement to reporters saying his buyout option had expired and the team was no longer for sale.
Rohr and Rodriguez appeared shocked and told the Star Tribune that they had secured the necessary funds and had submitted the paperwork to the NBA on time, giving the teams a 90-day extension to pay Taylor if they simply waited for league approval.
Taylor claims that Lohr and Rodriguez failed to complete contractual requirements on time, which led to the termination of that portion of the agreement.
ESPN reported that Taylor rejected the deal because he was concerned about whether Rolex and Rodriguez could maintain the franchise's success. According to the report, Rodriguez and Rolex projected a budget of $171 million for next season, which is below the luxury tax line and would require the Timberwolves to exceed in order to keep this season's roster largely intact.
A May 1 mediation hearing did not resolve the dispute and it automatically transitioned to arbitration, a binding process for resolving private disputes outside of court.
Impact on the team
In the emotional afterglow of Sunday's Game 7 win over the defending champion Denver Nuggets, Rodriguez, who flew to the Mile High City to sit courtside, was shown on national television sharing a special handshake and hug with Timberwolves star Anthony Edwards.
After announcing that the sale of the team was off, Taylor's lawyers notified Lohr and Rodriguez that they would no longer have access to certain team facilities or contact with players and staff, but the friendship remains.
Speaking to the media this week, players and coaching staff dodged questions about the ownership situation.
“I have a great relationship with all the ownership team,” Timberwolves manager Chris Finch said. “You know, it was never on my mind.”
Several players shared the same view.
“The biggest thing for me right now is just focus on trying to achieve my goals and then we'll see what happens after that,” said Rudy Gobert, the team's starting center in 2022.
Are players worried about who will dominate the team at season's end? “I'm not worried about it at all. I'm not worried at all,” Mike Conley said.
What's next?
The soured deal could end with Roa and Rodriguez selling their stake if they can't get control, the bankers said. In that case, they have an incentive to sell because the value of their shares has risen “more than the purchase price” due to the extraordinary rise in the value of NBA teams, making minority ownership less attractive than taking control.
“It could be a great investment, but they haven't made the decision,” he said.
No start date for the arbitration hearing has been announced, but it will take place in Minneapolis and must be completed within six months.
The winner of the case could seek damages. In Rodriguez and Lore's case, the amount cannot exceed the roughly $600 million they have already paid. Taylor's damages would likely be higher, said Twin Cities attorney Marshall Tanick.
“This is a business,” Taylor told Star Tribune columnist Patrick Ruse after he voided the sale. “Everybody has the right to an attorney.”
As the team advances through the Western Conference finals and lawyers prepare for a private court battle, both sides seem eager to get in on the action if the team wins its first NBA championship.
