If you had all the money in the world, how much would you pay to be the majority owner of an NBA team? The center of all the attention, the maker of all the decisions, and the owner of the bank account into which flows all of the profits?
Anyone who likes basketball nearly as much as I do would find owning an NBA team to be something equivalent to a 20-year orgasm (or the opposite, if you own the Magic), and while there are only so many people on earth with enough money to buy a team with solely their own money, at least some of them probably love basketball (though to be fair, probably not as much as this guy).
There is also a new breed of money-hungry Wall Street types (a redundant sentence if there ever was one) who now buy NBA teams as investments, although the price for the Rockets may run a little steep. Remember: you get comfortable buying good assets and cashing in on the profits. You make real fuck-you money by buying undervalued assets and making them profitable before re-selling (or just getting lucky when the entire market gets scorching hot — see NYC real estate + Trump).
Either way, that’s the reason that hedge fund and private equity (not the same thing, despite numerous erroneous reports) executives now own the Sixers and the Bucks, two shitty franchises currently on their way up. Hell, if Marc Lasry and Wesley Edens can just hold on until global warming makes Milwaukee look like Miami, they’ll really make a killing.
Then there are the potential Chinese buyers, who probably (shockingly, billionaires aren’t huge on transparency, and even less so in China) fall into both categories. The Rockets are — and always will be — huge in China thanks to a certain 7’6 restaurateur, and they’re currently minting billionaires in China like it’s Silicon Valley circa….well…2017.
The sale of the Rockets doesn’t appear to be an isolated incident for Rockets owner Leslie Alexander. He is currently selling three other properties in NYC and SoCal for just under $85 million. It seems a little coincidental he would sell them at the exact same time as the Rockets, and for all we know, the former bond trader has securities in other, less opaque, markets as well. Conspiracy theories are fun, but it probably just means some combination of enjoying his last 20 or so years (he’s only 74, despite Adrian Wojnarowski adding another decade to his age earlier today on ESPN), dividing his assets among family to avoid Lakers-style palace intrigue, and freeing up cash to give away BEFORE he dies.
Alexander wasn’t that well known on Wall Street (at least by those looking in from afar) and wasn’t stratospherically rich before buying the Rockets in 1993, so he probably doesn’t have the coin to save the world and own the Rockets. Coin won’t be a problem for him once the deal goes through. Because of their worldwide cachet, market size, front-office, on-court stability, and positive cash flow — and, of course, the rising tides of NBA franchise values — expect the Rockets to fetch at least $1.8 billion, and probably more than $2 billion. Perhaps a good deal more.
Who is most likely to buy the team? Let’s take a look at some candidates.
Kinder is an oil pipeline billionaire who had the good sense to leave Enron before it went belly-up. He also lives in Houston and has attended at least one Rockets game (above). He’s in his 70s. Other than that, we don’t know a hell of a lot. That kind of money ($6.6 billion) and at least a passing interest in the team makes you a contender automatically though.
Like Jeff Bezos, Ellison is one of the richest people on earth, but he’s shown actual interest in buying an NBA team in the past. He also pumps tons of money into the US side at the America’s Cup, proving that he isn’t all talk. That makes him at least a contender. Ellison isn’t about to decamp to Houston from his $100 million custom-made, Japanese-inspired compound in Silicon Valley or the stretch of Carbon Beach in Malibu where he owns over a DOZEN houses, but if he can snatch up a key rival of the Warriors — his hometown team that he failed to purchase — and shove it up Joe Lacob’s dweeby ass in the meantime, he may just go for it. It would be less than five percent of his net worth.
Anyone from Wall Street
There are two types of Wall Street buyers: there are the professional value seekers who see NBA franchise values rising almost exponentially, regardless of individual team performance, and are salivating to get in on it. And then there’s the Steve Cohen type, of which Steve Cohen is the only example. He’s the man upon whom Bobby Axelrod is very explicitly based, minus the good looks and rakish charm (he also doesn’t employ the wife of the US Attorney). He is currently banned from trading securities for the public by the SEC, but now works for a single client, who has entrusted him with $10 billion: himself.
The higher the price climbs, the more likely that Cohen, and not a numbers-oriented private equity investor, is the buyer. He is far richer and brasher (hence the insider trading) than the average Wall Street type. If the price stays below $1.5 billion for some reason and the main competition is local, you may see the more conservative Wall Street kind come along looking to unlock value.
Jim “Mattress Mack” McIngvale
A mattress king who’s local and has already expressed interest in owning the team. He could probably get local investors to team up with him and lower the financial outlay, while still leaving him as majority owner, a.k.a. the only fucking person who counts. See Vivek Ranadive and his 15 percent (reportedly) ownership stake and the other owners who hate him but have no power to control him. McIngvale is an institution in Houston and would have lots of local support.
Fertitta — a seafood dining and casino magnate who barely lost out on the Rockets to Alexander in 1993 and has done very well for himself since — has to be the betting favorite at this point. He has every advantage that McIngvale does, but he’s richer, and has already been quoted in detail about a potential bid, promising to keep the team in Houston if he wins, as if there would ever be a reason to leave the fourth largest city in the US. If there is such thing as a natural local fit, he’s it.
Except that the NBA is too global and too rich, and the Rockets have too much marketability in China to keep this deal local. Look at the Clippers, the Bucks, and almost every soccer team in Europe. The money is no longer coming in from local merchants, and on Monday, July 17, he acknowledged that if it’s a reasonable number he would buy it himself, if the number was unreasonable he would pull a group together, and if the number was crazy he would pass.
The number might get crazy, and if it does the reason will be China…
The betting favorite may be Fertitta (or it may not…just guessing), but Yao makes sense on a variety of levels and I think he will come out on top in the end. He played for the Rockets. He is a legend in China with close ties to the business and government elite. He moves with ease in both places. He has a business degree. He thought about buying the Clippers. He owns a pro basketball team in China. He knows the sport and is idolized by the fan base. Everyone who has ever spent time around him describes him as an amazing, extremely hard-working person.
And most importantly, he will find it easy to find financial backers with deep pockets in a rapidly-growing country that has recently turned billionaires into its main export. Part of the reason there will be so many backers with no problem letting Yao be the one in charge is because Yao’s presence alone could add an additional $1 billion or more in value to the team in China. It also wouldn’t hurt getting a bid approved by the other owners and their leader, Adam Silver.
The NBA would no longer be an abstract spectacle that the Chinese fans occasionally had one of their own participate in but mostly appreciated from afar. The league would now be in part Chinese, and the end result would be a bonanza for Houston. Merchandise sales. Lucrative preseason tours. Training camps in China. Direct sales of “membership” in the team that include extra behind-the-scenes digital content. With Yao in charge, Houston would always have the upper hand, but these are opportunities for other teams as well, and the other owners have to approve any owner and may have influence — directly, or through Silver — on whom Alexander chooses.
Unnamed Chinese Billionaire
We just listed the benefits of Chinese ownership. A Chinese bidder without Yao Ming as the frontman has to be another realistic possibility. There are potential candidates who fit the bill; perhaps one could even bring Yao on as a minority owner/front man à la Magic Johnson with the Dodgers before he went across town to El Segundo and took over the Lakers. The Internet especially has branded a new class of young Chinese mega-billionaires with the ready cash and entrepreneurial individualism necessary to pull the trigger and the cache in the American business community necessary to pass muster with the league. Jack Ma (above with Mamba, net worth $35.3 billion) is just one example.