Glen Taylor, Alex Rodriguez and Marc Lore are headed to arbitration.
After no resolution was reached during mediation to the dispute that delays, or potentially prevents, the sale of the NBA’s Minnesota Timberwolves and the WNBA’s Minnesota Lynx, Lore and Rodriguez, the potential buyers, have intends to begin arbitration quickly, said a source briefed on the matter. Athleticism.
They will have their arguments heard by a three-person panel in Minnesota to determine the fate of the organizations., although the schedule for the actual hearings may be extended as the parties choose judges and agree on a schedule.
Taylor, the current majority owner of the Timberwolves and Lynx, publicly announced in late March that Lore and Rodriguez’s attempt to purchase the franchises had failed after the two men failed to meet the deadline to purchase a franchise. 40% participation in the teams. The billionaire tech entrepreneur and former baseball star bought the franchises in stages, taking 20% in each of the previous years and was expected to acquire the final tranche this spring. But that hit a wall.
At the heart of the dispute is a roughly 1,500-word section of the sales contract, which sets out not only the terms of the transaction, but also how it will be resolved now that the parties involved are at an impasse. The disagreement lies, according to those who have examined the contract, on article 6.4(a), which stipulated that “the consummation of the exercise of each purchase option must take place, subject to the prior approval of the NBA, no earlier than sixty days after the exercise of each purchase option. Notice of exercise and no later than ninety days after delivery of the notice of exercise of appeal (the period of ninety (90) days will be automatically extended by ninety additional days if all NBA approvals or other required approvals from any government entity have not yet been obtained).
Lore and Rodriguez say they had put together the funding, including attracting investors like Dyal Capital and former Google CEO Eric Schmidt, and were waiting for the league’s approval, which comes after a vote by its board of governors. Athleticism reported last month that the duo submitted their financial documentation to the NBA the week before the deadline. Because they were waiting for approval, they say they are entitled to a 90-day extension per the agreement.
Lawyers who have reviewed the sales contract – but are not involved in the litigation – say Lore and Rodriguez have a strong case.
“If the buyer can establish that it has done everything it was required to do in terms of providing notice of the purchase exercise and submitting the information to the NBA, then section 6.4A certainly reads like he’s entitled to it,” David said. Franklin, attorney for Cozen O’Connor. “Because it’s not determination. This is not a 90-day extension that leaves some wiggle room. It specifically states which 90 day period will be automatically extended by an additional 90 days if all NBA approvals have not yet been obtained. So if the buyer can demonstrate that he materially complied with his obligations to submit the application with all necessary information and was simply sitting at home waiting for the NBA to say yes, then I read 6.4(a ) that he obtains the benefit of these additional 90 days.
AthleticismJon Krawczynski of Jon Krawczynski previously reported that Taylor also had other issues with the process, including potential buyers failing to meet several criteria before closing. Taylor can argue that Lore and Rodriguez were ineligible for the extension because they have not yet undergone final review by the Board of Governors’ Finance Committee or have not yet received a letter of approval or vote from the entire board of directors.
Ryan Davis, a partner at Bryan Cave Leighton Paisner, warned that the circumstances that led to the disagreement will prove very significant. Lore and Rodriguez will have to establish that they complied with the terms of the agreement and that if there were problems, they were not significant enough to void the deal.
“At first glance, it appears to me that the automatic extension would apply,” Davis said. “But if some other condition had not been met, if the NBA had said we were not going to approve it, if some other relevant party who had a right of approval had said we were not going to approve it approve, this could render the extension unnecessary because it would be impossible to meet all the conditions in any case. This is a highly fact-based test. On its face, Article 6.4(a). ) of this agreement gives me the impression that there is a very strong argument for an extension based on the specific language of this agreement. However, there must be a reason why the sellers are arguing that this does not apply. not apply.
NBA Commissioner Adam Silver said last month that the NBA would stay out of the dispute. This leaves Lore, Rodriguez and Taylor to resolve this issue according to the procedure outlined in the sales contract. Since mediation didn’t work, as is likely to happen, they resort to arbitration.
This three-person arbitration panel will include an attorney approved by each party who has not previously represented either party and a retired Hennepin County judge or magistrate of the United States District Court in Minnesota. The chief judge of Hennepin County District Court would appoint that judge to retirement if the two sides cannot agree on a choice.
Lore and Rodriguez said Taylor is now trying to back out of their deal due to “seller’s remorse.” The Timberwolves are having a season that may go down as the best he’s seen in his three decades as the team’s owner.
It is also worth noting the money behind the transaction. Taylor agreed to sell the team for $1.5 billion, which is now considered below the franchise’s market value as NBA team prices have surged in recent years. The Phoenix Suns and Mercury were sold for a $4 billion valuation last year. The Milwaukee Bucks were valued at $3.5 billion in a 2023 sale and the Charlotte Hornets were valued at $3 billion. A sports investment banker who reviewed the transaction documents believed Taylor could get more than $3 billion for the team if it made it to the NBA Finals.
“I see this as an uphill battle for Taylor,” the investment banker said of Taylor proclaiming that the team is no longer for sale, “but something that might make sense for him to have a asymmetric upside potential if he can prevail or find a way.” to obtain a settlement or a higher amount.
AthleticismJon Krawczynski contributed.
(Photo by Glen Taylor, Alex Rodriguez and Marc Lore: Bruce Kluckhohn / USA Today)