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Posted on: November 9, 2017
Source: Memphis Flyer
The Grizzlies’ buy/sell agreement is still behind the scenes, but you can expect it to take center stage.
On October 25, 2017, the Memphis Grizzlies passed a curious milestone in the history of the franchise: They entered the window of time in which Griz minority owners Steve Kaplan and Daniel Straus could trigger a “buy/sell” clause in their partnership agreement with Grizzlies controlling owner Robert Pera.
The agreement, put in place when the current ownership group took over the team in 2013, allows Kaplan and/or Straus to come up with a valuation for the team — to name their price, essentially — and then Pera has to either buy out the minority owner’s share at that valuation or allow the minority owner to buy out his controlling (25.1 percent according to initial 2012 reporting by Chris Herrington) interest in the team at that same valuation. Either Kaplan or Straus (who each owned 14.22 percent of the franchise initially) can trigger the clause, saying, for example, “the Grizzlies are worth $1 billion,” and then Pera can buy them out at $140,000,000, or they can buy him out at $251,000,000.
Normally an ownership change of a franchise is newsworthy in and of itself. But this particular wrinkle, coming at this point in time, is primed to make noise if and when it’s triggered. Kaplan partnered with ousted former Grizzlies CEO Jason Levien to buy a majority stake of Swansea, a club in the English Premier League. The dismissal of Levien, by all accounts, created a rift between Kaplan and Pera that remains unresolved, as seen most recently when Kaplan and Levien attempted to get together the funds to purchase a minority stake in the Minnesota Timberwolves.
It’s worth examining some of what happened around the time of Levien’s dismissal in the context of what might be coming if and when the buy/sell clause is triggered. Levien, in particular, is very well connected to many national NBA writers, as a former agent and an executive for multiple teams. Immediately after he was let go by the Grizzlies, multiple national outlets (most notably a Sports Illustrated piece by Chris Mannix that has since disappeared from the Internet) ran vicious takedowns of Robert Pera, painting him as a lunatic with no idea how the NBA works. You may remember the bit about having Dave Joerger wear a headset while he coached, like he was on a football sideline, or the part about firing Joerger and having Mike Miller be the player-coach.
Is Robert Pera an ideal owner? I’m not sure there is such a thing, but he’s proven himself to be plenty capable. It’s totally fair to criticize basketball operations leadership for this decision or that (especially as they let yet another first-round pick go this preseason), and his absence from Memphis has not done him any favors with locals who’d like him to show his face from time to time, but in no way has the way he’s run the team aligned with the stuff we heard back in 2014.
In the years since that acrimonious breakup, Pera has shown himself to be a competent owner, and one willing to invest a great deal in uncapped areas. The Grizzlies have spent millions of dollars renovating the practice facilities and locker rooms and improving the training staff. They continue to be at the forefront of creating new statistics with SportVU data and other motion-tracking stuff. It also can’t be denied that they’re willing to spend on basketball talent, with Mike Conley, Marc Gasol, and Chandler Parsons all playing on blockbuster deals.
It’s no secret that Kaplan wants to run an NBA franchise. By triggering the clause now, he either gains control of the Grizzlies or he gets a nice payout on his initial Grizzlies investment. Straus is more of a mystery, but my sense is that his investment in the Grizziles was just that: an investment, not a bid for control. The clause is a win-win for Kaplan.
Once triggered, the process will not be a quick one. Each step has baked-in 60-day review periods, and the whole thing could take months to resolve. But my assumption is that if and when it’s triggered, you’ll start seeing all kinds of stories pop up from otherwise reputable sources about how poorly Pera runs the Grizzlies, how tight the team’s finances are, and maybe some blatant blind-item ad hominem about other Grizzlies higher-ups.
It seems to be what happens every time there’s a national story about Grizzlies ownership — enough so that it seems naive to assume a coincidence. There’s no love lost between the parties involved, but for the sake of the Grizzlies and the sake of their still-burgeoning fanbase, one hopes the process plays out with as little drama as possible.