Tuesday, March 26, 2024

NBA's Preferred PEU Rescues Lore and ARod

The Carlyle Group backed out of $300 million in financing for Marc Lore and Alex Rodriguez' expanded ownership stake in the Minnesota Timberwolves.  

Lancaster Online reported:

Blue Owl HomeCourt, a $700 million fund managed by a division of publicly-traded Blue Owl Capital, has acquired a minority stake in the Timberwolves, a source familiar with the deal told the Star Tribune.  

A previous potential investor, Carlyle Group, a Washington, D.C.-based investment firm, decided not to move forward in a deal that would have provided structural financing to Lore and Rodriguez, a source familiar with the negotiations told the Star Tribune this week. The deal with Carlyle was meant to aid the next ownership payment. 

HomeCourt was formed in 2020 as a partnership with the NBA "to provide institutional capital to the NBA ecosystem" and is used to acquire minority equity stakes from minority shareholders of NBA teams. As such, its ownership stake does not require NBA approval.
NBC Sports reported:
...the NBA and Carlyle Group had been in negotiations about an investment and could not agree on the structure.
Thus, Blue Owl Homecourt rescued Lore's and ARod's ownership expansion.  Blue Owl was formed by the merger of Dyal Capital.  Dyal arose from the ashes of Lehman Brothers via Neuberger Berman.

Axios reported:
Owl Rock was a by-the-book Wall Street firm, formed by Blackstone and KKR vets. Dyal was a trailblazing upstart, with a Lehman Brothers pedigree.
Both the Dyal side and Owl Creek sides of Blue Owl have private equity underwriter (PEU) roots.

Blue Owl Homecourt holds stakes in the Sacramento Kings, Atlanta Hawks and Phoenix Suns.  Last summer the firm dropped the names "Dyal" and "Owl Creek" in favor of Blue Owl.

NBA ownership gets PEUier and PEUier.  Will players have to wear their PEU logo aside their team logo?  How many logos might they wear if it's a PEU club deal for an NBA franchise opportunity?  It might require long sleeve jerseys to display them all.  

Additional luxury skyboxes will be needed.  Let's hope they are Tepper proof.  Ticket buyers don't need owner backwash tossed on them.

Update 3-27-24:  What are the consequences of making the NBA PEU friendly?  
...wonder if the league will lose the fabric of so many things that makes it special while chasing and courting every entity, sacrificing its beautiful soul along the way.

Update 4-3-24:  The deal for Lore and ARod to take a majority stake in the Timberwolves fell through.  The current team owner changed his mind.

Blue Owl Capital's private lending exploded in the last few years and the company. like most PEUs, is "getting into insurance" or getting a giant pot of money to steer into its investments/funds.