Here is the story Tim Tucker and I did on the Hawks current ownership situation that appeared in Sunday’s print edition of the AJC. I think you will find some details that haven’t previously been reported.
One year later, the Hawks’ ownership group considers itself fortunate that its deal to sell a majority stake in the team to a Los Angeles businessman fell through.
“Extremely” fortunate, Bruce Levenson said. “Extremely.”
In an exclusive two-hour interview with The Atlanta Journal-Constitution, Levenson — the ownership group’s co-managing partner and NBA governor — described in detail for the first time how and why he and his partners moved from having one foot out the door to a full re-engagement.
Levenson said the group has made no effort to sell the team since the deal with Alex Meruelo was called off Nov. 4, 2011. He said the group hopes to add minority investors, but is focused on building the franchise and owning it long-term.
Levenson’s account of the group’s intentions appears confirmed by the Hawks’ hiring this summer of general manager Danny Ferry, who says he wouldn’t have accepted the job if he hadn’t been convinced of the stability and commitment of ownership.
It’s a substantial change from a year ago.
Reeling from a five-year legal battle with former partner Steve Belkin and the sale/relocation of the Thrashers hockey team, the ownership group agreed in August 2011 to sell a controlling interest in the Hawks to Meruelo. When the deal collapsed three months later because Meruelo wouldn’t meet financial conditions placed on it by the NBA, the Hawks owners announced the team no longer was for sale. Even so, many observers figured the group might continue quiet efforts to sell.
Actually, Levenson said in the interview at a CNN Center restaurant, the group had come to regret the decision to sell by the time the Meruelo deal collapsed.
“We had made the decision … to sell a majority interest in the team so there would be a new, fresh face of ownership,” Levenson said. “A lot of things led to that decision.
“We had not long before gone through this very public, very fractious dispute among our ownership group, and even though we were pleased with the result of that (the buyout of Belkin), it was still a very painful dispute. On top of that, we had just gone through the sale of the Thrashers, another very painful and public process. And on top of that, we were going into an uncertain period in the NBA with the collective bargaining agreement. There were huge questions whether there would be meaningful revenue sharing (among teams) and whether middle-market teams (such as the Hawks) would participate in that revenue sharing.
“When we talked about all of that, we said it really might make sense to sell a majority interest … but continue to play a role going forward (by retaining a minority stake). So we started that process in motion and pretty quickly came to a possible buyer.”
On Aug. 8, 2011, the Hawks announced a deal — contingent on NBA approval — to sell to Meruelo. As the approval process dragged on, Levenson said, the bleak picture that drove the decision to sell began to brighten.
“The [Belkin] dispute became further and further in the background; all the angst that had been created for us personally … began to sort of move away,” Levenson said. “The negotiations with the league on both the collective bargaining agreement and revenue sharing began to take shape. … It became increasingly apparent to me that middle-market teams would have a meaningful place in revenue sharing. That was important because the closer we can get to a level playing field among teams, the better for the league and the Hawks.
‘The other thing that happened is the Thrashers left and a lot of the pain, the sense of failure, began to heal, like a wound heals with time. Then on the heels of that, there came some issues around the [Meruelo] transaction.
“At that point, we kind of looked at each other (within the ownership group) and said, ‘What are we doing? We love this. We can do better, but we’re doing plenty of things right here. Let’s really commit ourselves going forward.’ And that’s what happened.”
By October 2011, the proposed sale had bogged down because the NBA required additional funding from Meruelo that wasn’t contemplated in his original deal. It was no surprise when the transaction was called off. The surprise was that the Hawks’ owners didn’t seek another buyer.
A year later, as a new season approaches, Levenson said his group would like to add minority investors who could contribute to the organization in ways beyond financial, but added “nothing is imminent” on that front.
“We’ve had preliminary conversations with people who we think could add strategic value,” Levenson said. “These people come everywhere from the entertainment world to the international community.”
He reiterated in a followup email that such person(s) would be “not a majority investor” and “at the top of our list would be our desire to add people with standing in the Atlanta community as ideal additions to our group.”
The group originally known as Atlanta Spirit LLC — a name it dropped last year — bought the Hawks, Thrashers and Philips Arena operating rights from Time Warner in 2004. Seven of the original nine owners remain: Levenson and two of his partners in a large Rockville, Md.-based business-information company, Ed Peskowitz and Todd Foreman; Atlanta-based cell-tower entrepreneur Michael Gearon Jr., who is the group’s other co-managing partner, and his father Michael Gearon Sr.; Atlanta attorney Rutherford Seydel; and Beau Turner, son of former Braves and Hawks owner Ted Turner.
Levenson and Peskowitz own equal shares that originally totaled a combined 39.4 percent of the partnership, but increased to more than 50 percent and effective control after the buyout of Belkin’s stake.
Levenson declined to provide a current breakdown of specific ownership percentages, saying the group operates as a partnership in which the contribution of each member is not a function of the size of his stake. The owners hold an hour-long conference call every two weeks with team officials.
As the Hawks’ NBA governor, Levenson has the franchise’s voice and vote at the league level. He took the lead in hiring Ferry. And in an indication the league considers the Hawks’ ownership situation stabilized, Levenson is on the NBA owners’ planning committee, which works on revenue-sharing issues, and recently served on committees that interviewed prospective buyers of two franchises that changed hands.
Levenson said the Hawks continue to lose money, but not nearly as much as previously. “More importantly, there is a very clear path now to a sensible economic model,” he said, citing the collective-bargaining and revenue-sharing deals reached last year. “I am extremely bullish on our financial future.”
According to the Hawks, the owners invested $9 million on capital improvements in the past year, including LED boards and a restaurant in Philips Arena and an exterior marquee, and recently approved five new positions in basketball operations and player development.
“When we went through this process of recommittal, we knew … we had to set the bar higher,” Levenson said. “This really is for me about the future, about our commitment.”
The owners’ best-received move might have been hiring Ferry after courting him for three months.
“We had very clear and open conversations,” Ferry said. “I asked very direct questions of (Levenson). He gave very clear and honest answers. He asked direct questions of me. I gave very clear and honest answers. This was a situation I (was) comfortable in, very comfortable that we were going to be given a great opportunity to succeed.
“I wanted to feel comfortable we would be working together going forward. …. I wanted to feel I was working for someone with strong values who I would enjoy working with.”
Among the questions Ferry asked before accepting the job, according to Levenson: “One, were we committed to building a championship organization here? And two, did we have our act together in terms of how we manage this business from an ownership perspective?
“There is no way Danny Ferry comes here,” Levenson said, “if, through his due diligence, he didn’t determine that was the case.”
- Tim Tucker and Chris Vivlamore
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