Tuesday, June 6, 2023

Explainer: inside the proposed sale of Sun and Mercury

Matt Ishbia’s career statistics at Michigan State were: He averaged 0.6 points, 0.3 rebounds and 0.3 assists per game.

Not exactly a record-setting number.

A look at the sale, and the process that awaits:

political cartoon

Ishbia, who turned 43 on January 6, is passionate about basketball. At only 5-foot-10, he was a fine high school player, with a flair for theatrics—such as a 36-point game and the top scorer on his Birmingham (Michigan) Seaholm High team in 1997–98. Making both ends 1-and-1 late in regulation to help his team win overtime and defeat a crosstown rival.

He walked onto the team at Michigan State, played the last few seconds of the Spartans’ 2000 national championship game victory over Florida, and became so important to coach Tom Izzo that by the end of his career Ishbia was sitting next to Izzo on the bench—actually Serving as assistant coach.

He has greenlit the state of Michigan ever since. Several of his former colleagues – Mateen Cleaves among them – have worked for Ishbia at United Wholesale Mortgage, the company his father founded and which Ishbia now runs. And his $32 million gift to the school in 2021 helped secure, among other things, football coach Mel Tucker’s $95 million contract.

Some would say that he was given the keys to a company formed by his father, which is true. It should also be noted that Ishbia came up through the ranks and didn’t immediately enter the CEO suite. UWM had fewer than 20 employees when his father asked Ishbia to join the company, and he told the Detroit Free Press in a 2020 interview that his first salary was $18,000.

UWM now has approximately 8,000 employees; Ishbia’s pay package last year was just under $8 million and his net worth is estimated by Bloomberg at $5.26 billion.

His company went public in January 2021 and is a rival to Quicken Loans – a company that has Cleveland Cavaliers owner Dan Gilbert as its founder and chairman. Gilbert is a Michigan State alum, as is Ishbia and Detroit Pistons owner Tom Gores.

Ishbia told CNBC in 2021, “My business is not built to have competitors like me.” I’m going to win for my shareholders and team members and brokers.

Why is the Phoenix franchise worth $4 billion?

It probably isn’t, although Ishbia apparently believes otherwise. It’s an investment and possibly a very smart one.

The most recent valuation of the Suns franchise was listed by Forbes at $2.7 billion. Sports franchise values ​​are skyrocketing, and in the NBA, a new media rights deal is underway that could be worth three times the current $24 billion, nine-year deal.

It will make teams even more valuable, and the NBA business is booming – league revenue topped $10 billion for the first time last season.

What does the deal mean for the expansion of the NBA?

Expansion in the NBA is coming, after the next collective bargaining agreement — something that should be done in the next few months — and the media rights deal is complete. With this sale, and valuing the clubs at $4 billion, the NBA could easily command another $5 billion or more in expansion fees for the next group that wants to buy into the league.

NBA commissioner Adam Silver said last week, “We need to renew them … then we’ll turn to expansion.” “As I’ve said in the past, I think, it is our manifest destiny to continue to grow and grow not only in the United States but outside the United States as well.”

It is not imminent. It’s hard to see the NBA expanding before 2025 at the earliest.

Why was there a need to sell Surya?

On paper, Robert Sarver would have been welcomed back as an owner after his one-year suspension expires in September 2023. the manner.

Sarwar was the managing partner, which meant that he could agree to the sale, even if it involved limited partners.

Ishbia and his brother Justin Ishbia are buying all of Sarwar’s stake, as well as the ownership of some limited partners, and will control more than 50% of the team once the sale is approved.

Ishbia will be investigated by the NBA. The league will look for any red flags in his personal finances, in his company finances, in his personal conduct, and more.

Once this process is complete, the league’s board of governors will vote to ratify the sale. The most likely timeline allows Ishbia to capture the Sun and Mercury by February or March.

More AP NBA coverage: https://apnews.com/hub/NBA and https://twitter.com/AP_Sports

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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