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Pro-sports-teams-sales insider on Karen Davidson getting just $325 million from Tom Gores: “They ripped her face off”

Bill Shea of Crain’s Detroit Business:

One insider familiar with pro sports franchise sales, who spoke on the condition of anonymity, was flabbergasted at what Gores paid to assume majority ownership from Karen Davidson.

"That is a shocking price," he said. "If he got the team and the real estate (for $325 million), are you kidding me? They ripped her face off."

Shea also sheds light on how some of the minority owners participated in the deal:

Additionally, Ethan Davidson, son of late Pistons owner William Davidson from a previous marriage, said he sold his minority stake to Gores but is in talks with him to buy back a share.

"For me, things pretty much stay the same," he said.

Karen Davidson owned 76 percent of the Pistons and will maintain a single-digit equity stake. The remaining 24 percent was split among several people, who agreed to sell their shares when she sold the majority.

2 Comments

  • Jun 6, 201112:57 pm
    by gordbrown

    Reply

    People closer than I might understand this better, but my understanding was the $325 figure put the franchise value at around $400 discounted against outstanding liabilities (debt accumlated through the past year including up front costs for the upcoming concert season which presumably will be covered by the cash flow from summer concessions/parking/sponsorships) and the fact that the Davidson family is keeping up to 10%. Of course this is still less than Golden State sold for but obviously more than what Illitch was prepared to pay and getting approval from the NBA from out of state buyers would have been much more difficult. So motivated seller, timing of the sale and a discount against the reduced attendance this past season (which will cost money to address) seem to make this a reasonable deal. Is this article just rabble rousing?

  • Jun 6, 20116:24 pm
    by Laser

    Reply

    not sure i’m feeling your perspective, friend. sounds like a ridiculous bargain to me. and i’m not 100% sure it’s more than ilitch was willing to pay, but maybe after that deal fell through KD ended up taking what she could get. doesn’t sound much like rabble rousing to me.
     
    but this selling price looks like a good reason KD probably should have handled the sale differently. the economy may be depressed, and the team may be down, but this is a good market. this isn’t atlanta, where they can trot out a middle-tier playoff team year after year and the fans couldn’t care less. i’m certain detroiters will support a good pistons team. without the benefit of a superstar, we were attendance leaders for god knows how long. if she’d just stopped the bleeding and had the patience to allow the team to bounce back just a little, she’d surely have gotten a good deal more money. but she didn’t care about any of that. once we’re in the “hundreds of millions of dollars” range, i think she just wanted it to be done. and a tip of the hat to gores for making it happen.
     
    bottom line: $325m sounds like an absolute steal to me when you factor in the various healthy entertainment properties, and i don’t think it will take much time or money for gores to get the franchise on track to being healthy again. relatively speaking, of course. the handful of years it’ll take will feel like an eternity to fans, given how badly things have been mangled, but i think it’s a hell of a wise investment.

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