In a rather inexplicable deal, Marc Lasry and Wesley Edens, two men who got rich in part by buying damaged assets at bargain basement prices, have agreed to pay $550 million--at least $50 million more than anyone else was considering paying--for the Milwaukee Bucks.
Half the deal is spot on with the two hedge fund managers' histories--the Bucks are the dregs of the NBA. But the hefty premium runs counter to how Lasry and Edens made their fortunes.
The NBA landscape has not changed since the Sacramento Kings were sold for $534 million a year ago (well before the Kings sale people were talking about the potential value in the NBA's next national broadcasting deal), and that deal included roughly $100 million of real estate and an arena (albeit one that is antiquated). So Lasry and Edens effectively paid $100 million more for the Bucks despite Milwaukee being a much smaller market than Sacramento.
This may explain why no other potential buyers were willing to even pay $500 million for the Bucks. All the sports bankers and people familiar with the sale process that I spoke with say most of the offers for the basketball team were in the low-to-mid $400 million range. Two people said their clients were willing to pay in the "high fours," with one of them telling me they had "to really stretch to make that number work."
Inner Circle Sports, which represented Lasry and Edens in the purchase, did not respond to an email query about the purchase price. Nor did a representative for the two buyers.
Could the $550 million be a doctored figure? Recall that when Michael Jordan bought the Charlotte Bobcats in 2010 some media reported the price as $275 million although the real purchase price--enterprise value--was only $175 million. Neither the NBA or a rep for the buyer of the Bucks would comment on the $550 million figure, but I have spoken to a few people with knowledge about the transaction who say the enterprise value is indeed very close to $550 million.
Not long after Herb Kohl hired Steve Greenberg of Allen & Co to sell his basketball team back in December, Greenberg told the NBA that he would get more for the Bucks than the Kings were sold for. He was true to his word.
But why did Lasry and Edens acquiesce?
