An exciting power struggle is brewing in the NBA that could have a decisive impact on the future of the Minnesota Timberwolves and Minnesota Lynx (WNBA). Glen Taylor, the controlling owner of the two teams, is at the center of an arbitration case against minority owners Marc Lore and baseball legend Alex Rodriguez.
The hearing begins this week and is expected to last until the weekend. A decision is expected in December, Timberwolves sources told ESPN.
Timberwolves: The background to the dispute
The conflict revolves around a deadline that Taylor sees as missed. Lore and Rodriguez, on the other hand, believe that they have fulfilled the conditions of the purchase agreement and are therefore entitled to an extension. In 2021, Lore and Rodriguez had agreed to purchase the Timberwolves and Lynx at a value of $1.5 billion.
The contract stipulated that they should acquire a total of 80% of the shares by the end of March 2023. However, Taylor stopped the sale on March 28, claiming Lore and Rodriguez had missed the deadline for the final payment.
The role of the NBA
A key point is that all ownership transfers must be approved by NBA team owners. Lore and Rodriguez need approval from 23 of the 30 owners to be recognized as the new owners.
NBA boss Adam Silver emphasized that the league is not currently involved in the process and will wait for the arbitration process. “This is a process that exists independently of the league and is established in the sales agreement,” Silver said in September.
Financial maneuvers behind the scenes
Lore and Rodriguez have worked hard in recent months to strengthen their financial base. They have brought in billionaires like Michael Bloomberg and Eric Schmidt as partners and have raised $950 million, which is held in escrow.
They also plan to buy out Taylor and his partners completely, not just the controversial 40%, sources reported. To strengthen their position, they have also demonstrated $200 million in working capital.
The Timberwolves face significant financial challenges. With a current payroll of over $200 million and an estimated luxury tax bill of $96 million, the team is expected to incur significant losses this season. This was a factor in the recent trade of star player Karl-Anthony Towns.
The possible consequences of the arbitration award
If the arbitrators rule in Taylor’s favor, he could end the sale process and remain as controlling owner. However, he has indicated that he would not put the team up for sale again.
If Lore and Rodriguez win, Taylor would be contractually obligated to sell them controlling interest. However, this could lead to a lengthy process as it requires approval from the NBA owners.
A potential win for baseball legend Rodriguez
A successful completion of the purchase could prove extremely lucrative for Lore and Rodriguez. The Timberwolves were recently valued at $2.9 billion by Sportico and $3.1 billion by Forbes. A purchase at a valuation of $1.5 billion would provide them with immediate significant equity gains.
Taylor, on the other hand, has good reasons to fight for control of the team, especially given current market values and his ambitions to see the team as a championship contender.
Another aspect at stake is the future of esteemed team president Tim Connelly. In 2022, the Timberwolves managed to lure Connelly away from the Denver Nuggets with a five-year, $40 million contract. This contract contained an exit clause that could come into effect in the summer of 2025 if the ownership issue is not resolved by then. Regardless of the outcome in the next few months, Connelly could become a sought-after candidate on the market.
