A-Rod, Lore Raise Money at Higher Valuation as T-wolves Deadline Nears
Alex Rodriguez and Marc Lore have spent much of the last six months raising money to fund their purchase of the Minnesota Timberwolves, with a critical deadline due in nine days, according to multiple people familiar with the situation.
The group has until Dec. 31 to exercise an option to buy another 20% of the team from current owner Glen Taylor, the first of three pre-priced call options in a unique layaway deal approved by the NBA last July. Rodriguez and Lore have spoken with private equity firms, family offices and individual investors about coming in at higher price than the $1.5 billion valuation that they negotiated last year, said the people, who were granted anonymity because the details are private. Some of those conversations happened as recently as this month, the people said.
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It’s unclear how far along the group is in securing funds, or if they intend to continue with the acquisition. Representatives for Rodriguez, Lore and the NBA declined to comment. A representative for the Timberwolves didn’t respond to a request for comment.
Lore and Rodriguez’s initial down payment last year bought them the initial 20% of the Timberwolves and the WNBA’s Minnesota Lynx at that $1.5 billion number. The call option on the next 20%, which must be exercised by Dec. 31, comes at a slightly higher valuation, the people said. If exercised, the group has 60 to 90 days to close on that payment.
The third option, a 40% stake that would give the pair a majority of the franchise, must be exercised before the end of 2023. The option for the final 20% must be exercised before Dec. 31, 2024.
The initial deal surprised many in the NBA when it was announced—a combination of its unique structure and the valuation, which was lower than many expected. Sportico currently values the team at $1.7 billion, third lowest in the NBA. The price looks even better after the $4 billion valuation in Mat Ishbia’s recent Phoenix Suns deal.
Though there are small escalators in the deal—4%, according to a source—the two investors clearly saw an opportunity to improve the economics over the course of the payments. Lore and Rodriguez have discussed significantly higher valuations in their talks with investors, according to people familiar with those talks, including numbers higher than $2 billion.
While unorthodox, that’s not unheard of. Real Salt Lake owner David Blitzer is currently sitting on a $2 million option to buy into the NWSL—a hefty discount to market rate—and is currently raising money for the parent company of both soccer teams.
The Timberwolves deal also turned heads because of uncertainty surrounding the money. Lore has a successful track record as an entrepreneur, including the sale of his Jet.com to Wal-Mart for $3.3 billion, though it’s unclear if he’s a billionaire. Rodriguez made $455 million in salary in his MLB career, according to Spotrac.
Under the original agreement, Purple Buyers Holdings LLC, which is controlled by Lore and Rodriguez, initially purchased 20% of the Timberwolves and Lynx in the middle of 2021. That gave the group a series of three more call options to continue to buy up equity, which if fully executed, would give them 100% of the club. Taylor is the controlling owner, but the team does have LPs, which are also participating in the deal.
The first option, which must be exercised by the end of December, is for limited partner shares owned by Taylor. The second option, 40% due by the end of 2023, includes general-partnership interests and all of the non-Taylor LP interests. The final 20%, due by the end of 2024, is all equity from Taylor.
Lore and Rodriguez can opt not to exercise any option, but if they do, the others immediately terminate. Should they decline to execute Option 1 by the end of this month, they would simply become 20% minority owners in a team still controlled by Taylor.
Rodriguez and Lore have already begun shaping the futures of both franchises, as they OK’d the hiring of Timberwolves general manager Tim Connelly in May and a new multiyear extension deal for longtime Lynx coach and president of basketball operations Cheryl Reeve. While the two have joined the board of directors for both teams, with more input than typical limited partners, Taylor remains in full control.
The specifics around that control were part of a lawsuit filed shortly after the initial agreement. Meyer Orbach, the largest outside LP in the Timberwolves and Lynx, sued Taylor last year to immediately get paid out for his roughly 17% share, which he valued at $300 million. Orbach argued that Lore and Rodriguez entered into a control sale last summer and he had right to sell his minority stake. A U.S. District Court judge later dismissed the case in favor of Taylor, though on grounds that Lore and Rodriguez had not yet completed the necessary transactions and received league approval to indeed initiate the control sale.
Lore paid some of Rodriguez’s portion of the payment last year, according to the New York Post, and has seemingly become the control man behind the group despite them being advertised as equal partners. Following the first payment, the Post reported, Lore owned 13% of the Timberwolves, with Rodriguez holding 7%. It’s unclear if the Wonder Group chairman would cover the former New York Yankees star moving forward.
All this uncertainty speaks to the overall riskiness of layaway controlling ownership purchases. The NBA isn’t the only major U.S. league to approve such arrangements. A majority stake of the NHL’s Nashville Predators was recently sold to former Tennessee Gov. Bill Haslem in a similar format. His stake is also to be paid over a three-period, with bigger escalators than the Timberwolves deal. The Predators are valued at $775 million valuation at the start, and a $900+ million valuation for the final payment in 2025.
Taylor, now 81, paid about $90 million for the Timberwolves in 1994, and has previously entertained other offers for the team. In 2020, Memphis Grizzlies investor Daniel E. Straus was reportedly in advanced talks to buy the team, but they fell apart. When Taylor was negotiating with Lore and Rodriguez, there was a separate cash offer at a similar $1.5 billion price, according to someone familiar with the bid.
Taylor has long been adamant about the Timberwolves remaining in the Twin Cities market, and at some point, the team’s ownership will have to evaluate the long-term value of its current home. The Target Center, which was built in 1990, is the second oldest arena in the NBA, though the city-owned venue completed a $145 million renovation in 2017. The Timberwolves’ lease expires in 2035.
Should the Rodriguez and Lore deal fail to advance, Taylor could theoretically hit the market once again looking for buyers. After this week’s Suns deal, he might be able to fetch a higher price.
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