The Minnesota Timberwolves and Minnesota Lynx ownership saga that has dragged on for three years now has reached a critical point. On Monday, an arbitration hearing will begin in the battle to determine who is the rightful owners of the franchises. And it is a battle.
Current majority owner Glen Taylor will be face-to-face with minority owners Marc Lore and Alex Rodriguez and in front of a three-person panel that will decide whether Taylor was justified in calling off his agreement to sell the teams to Lore and Rodriguez or if the two partners have fulfilled the contract and should be able to complete their $1.5 billion purchase.
The two sides started in heartwarming fashion, meeting at the Taylors’ winter home in Naples, Fla., in 2021 and bonding over homemade hamburgers and a desire to solidify the Timberwolves’ future. At the time, Taylor was ready to bring on partners who would eventually take over the teams, and he connected with Lore on his self-made, entrepreneurial background and Rodriguez for how he parlayed his baseball stardom into success in the business world.
Taylor approved an unconventional pathway to ownership for the two friends, but the deal hit the rocks in March when Taylor claimed that Lore and Rodriguez had not fulfilled their end of the bargain. Lore and Rodriguez vehemently dispute that interpretation. The bitter dispute spilled into the public when Taylor said Lore and Rodriguez did not have the money, prompting Lore and Rodriguez to fire back and accuse Taylor of backing out of the deal because of “seller’s remorse.”
Seven months later, after both sides have given depositions, they will meet in front of the panel in Minneapolis. Here’s a primer to set the stage for the showdown:
The deal
In April 2021, Taylor announced that he had reached an agreement to sell the Wolves and Lynx to Lore, a startup maven who turned several ventures into vast wealth, and Rodriguez, the three-time American League MVP who starred for the Seattle Mariners, Texas Rangers and New York Yankees and became a lightning rod after a performance-enhancing drug suspension.
But the deal had an interesting twist. For years, Taylor had been looking for a partner who would come in as a minority owner, ride shotgun for a few years with Taylor and then take over as the general partner. Most of the prospective buyers he had met with in the past wanted to take control immediately. But Lore and Taylor agreed to the arrangement. They were basketball outsiders, so it was framed as a chance for them to learn the league, be mentored by Taylor and gradually take control.
The early days were promising. Taylor granted Lore and Rodriguez significant influence on the business and decision-making processes that minority owners typically do not have. Lore and Rodriguez recruited Tim Connelly away from Denver to lead the front office, made hires to the business side of the operation and were a regular presence around the team.
The plan was for Lore and Rodriguez to make the purchase in chunks called tranches, starting with 20 percent right away, another 20 percent in 2023 and a 40 percent stake that would take them to majority ownership in early 2024. They made the first two purchases, but the agreement crumbled before the third payment was made.
The dispute
When Taylor called off the deal in March, he said that Lore and Rodriguez did not meet the requirements of the contract and called into question their ability to pay for it.
Lore and Rodriguez had to make a change in their financing late in the process when the Carlyle Group, a private equity firm that was part of Lore and Rodriguez’s ownership group, had to withdraw because it could not meet NBA requirements to be part of the team. Lore and Rodriguez quickly pivoted to Dyal Capital, a group already approved by the NBA with stakes in three other teams.
Lore and Rodriguez submitted their financial documentation a week before the March 27 deadline, but Taylor said that because the purchase was not finalized by that date, the deal was off. Lore and Rodriguez point to a section in the purchase agreement that states that their ability to complete the transaction “shall be automatically extended by an additional ninety days if all NBA Approvals or other required approvals of any Governmental Entity have not yet been obtained.”
“Under certain circumstances, the buyer could have been entitled to a limited extension,” Taylor said in March. “However, those circumstances did not occur.”
This was met with significant protest from Lore and Rodriguez, who said that Taylor is trying to renege on the deal because the team is now worth about twice as much as he agreed to sell it for in 2021.
“It’s about just old-fashioned greed,” Lore told The Athletic in March. “We’ve created real value in the team over the last two and a half years, and he wants that value back and is willing to break the contract.”
The process
The purchase agreement calls for any dispute to be resolved by mediation or arbitration. The two sides did have a mediation session this summer, but it was quickly deemed to be unsuccessful. The arbitration process began with both ownership groups and team officials meeting with lawyers for depositions all summer long.
The three-person panel was agreed upon by both sides. They will conduct the hearings this week, listening to testimony from the parties involved and then take the matter under full advisement. A ruling is expected sometime in the next 30 days, according to sources on both sides of the matter.
If the panel rules in favor of Taylor, he retains control of the team, and Lore and Rodriguez could either remain on as limited partners or try to exit the group. Taylor would have to approve the sale of their shares, according to team sources familiar with the agreement.
If Lore and Rodriguez prevail, they can move forward with the acquisition of the team. Their ownership group, including former New York City Mayor Michael Bloomberg and former Google CEO Eric Schmidt, has amassed $950 million in an escrow account that is ready for them to purchase not just the 40 percent needed to take them to majority control, but the final 64 percent to give them 100 percent ownership of the team.
The group would still have to be approved by the NBA’s Board of Governors before they could complete the transaction. Lore and Rodriguez have been meeting with owners for months to build the necessary support and have outlined plans for a new arena, among other major moves to illustrate their long-term vision for the franchise.
On the court
The Lynx made a surprising run to the WNBA Finals, where they lost to the New York Liberty in a thrilling five-game series. Cheryl Reeve was named WNBA Coach of the Year and Executive of the Year and Napheesa Collier emerged as a superstar and WNBA Defensive Player of the Year.
After advancing to the Western Conference finals in May, the Wolves made a significant trade just before training camp. They sent Karl-Anthony Towns to New York for Julius Randle, Donte DiVincenzo and a first-round pick, a move that was partially motivated by finances so they could get under the second apron spending threshold and have more flexibility to build around Anthony Edwards, one of the league’s brightest young stars.
They have sold more than 11,000 season tickets for the first time since their first season in Target Center in 1990-91, but still face a luxury tax bill of $100 million and total operating losses of more than $150 million, according to team sources. Taylor has told team executives that he is comfortable paying the tax for now while he believes the team’s championship window is open.
Lore and Rodriguez have put together a group that includes deep-pocketed limited partners, so they can be aggressive in the coming seasons.
For the most part, players, coaches and executives have not spoken at length about the ownership fight. Their primary focus is getting a new roster to come together as a team and start playing the kind of defense that keyed their rise in the West last season. Connelly, brought in by Lore and Rodriguez, restructured his contract after last season so he has an opt-out clause available next summer, which gives him the power to leave if he doesn’t like the way things are going.
After watching how messy this situation has gotten, NBA Commissioner Adam Silver said last summer that the league would frown upon similar arrangements in the purchase of teams going forward. It has been a long, bitter fight for control of the teams. Now that fight appears to be closing in on a resolution that will allow everyone to move forward.
(Photo of Glen Taylor, Alex Rodriguez and Mark Lore: Bruce Kluckhohn / Imagn Images)
