Legendary NBA player Michael Jordan is selling his majority stake in the Charlotte Hornets. The sale ends the post NBA playing chapter for Jordan and also represents a huge return on investment. Here’s a look at the history of his NBA team ownership and how the sale relates to his NBA salary and Nike Inc NKE earnings.
What Happened: Jordan is selling his majority stake in the team to an ownership group led by Gabe Plotkin and Rick Schnall. The deal will see Jordan maintain a minority stake and add to his billionaire status.
On Friday, Hornets Sports & Entertainment announced the majority sale, which is subject to league approval.
Plotkin, previously acquired a minority stake in the Hornets in 2019. Investors might remember Plotkin as the founder of Melvin Capital, a hedge fund that shorted GameStop Corp GME. Melvin Capital closed in 2022 and returned funds to investors after suffering massive losses due to its role in a battle with retail investors.
Schnall is the co-president of Clayton, Dubilier & Rice and also a minority owner of the Atlanta Hawks. Schnall is working on selling his investment in the Hawks.
Among the other buyers of Jordan’s stake include Chris Shumway, Dan Sundheim, Ian Loring, Amy Levine Dawson, Damian Mills, rapper J. Cole and country musician Eric Church. Fans of Church may remember him cancelling a concert previously, as it coincided with a UNC vs. Duke men’s college basketball game in the NCAA Tournament.
Hornets Sports & Entertainment owns the NBA’s Charlotte Hornets, NBA G League team Greenboro Swarm, NBA 2K League team Hornets Venom GTT and manages the team’s Spectrum Center arena, which is owned by the city of Charlotte.
In the 13 years of Jordan's ownership, the Charlotte NBA team posted a winning record only three times and made the playoffs twice, losing in the first round both times.
Jordan purchased the team in 2010 for $275 million, when the team was still known as the Charlotte Bobcats. The NBA legend bought a minority stake previously in 2006.
“Purchasing the Bobcats is the culmination of my post-playing career goal of becoming the majority owner of an NBA franchise,” Jordan said at the time. “I plan to make this franchise an organization that Charlotte can be proud of, and I am committed to doing all that I can to achieve this goal.”
Related Link: Michael Jordan's Massive Donation To Make A Wish Is A Slam Dunk
Jordan Scores Big on Investment: During his time in the NBA as a player, Jordan made $93.6 million. The most Jordan ever got paid in a season was $33.1 million for the 1997-1998 season with the Chicago Bulls.
Years after retiring, Jordan became a billionaire thanks to his endorsement deals, specifically his deal with Nike for the Jordan brand. Sportico estimates that Jordan has made $1.8 billion from his Nike deal, which pays out royalties annually.
Jordan’s deal with Nike was recently turned into the major motion picture “Air,” starring Ben Affleck and Matt Damon.
The impending sale of the Hornets is set to be the most significant financial transaction in Jordan's career. The deal, which values the Hornets at an estimated $3 billion, will see Jordan's majority stake sold for over $2 billion. This surpasses his earnings from Nike, marking a new high in his financial journey.
Turning a team from a $275 million valuation into a $3 billion team in 13 years represents a greater than 10x return.
How You Can Invest in Hornets: Another investor in the new majority stake of the Hornets is Dyal HomeCourt Partners.
Dyal Homecourt Partners is a unit of Dyal Capital, which is owned by Blue Owl Capital OWL. The unit was formed in 2020 through a partnership with the NBA to improve liquidity. Homecourt can acquire minority stakes in an unlimited number of NBA franchises as part of its agreement with the league.
Alongside having an investment in the Hornets, Homecourt is also an investor in the Atlanta Hawks and Sacramento Kings.
The company previously held a stake in the Phoenix Suns, which it cashed out when Mat Ishbia bought the team at a $4 billion valuation. The Blue Owl division saw a substantial return of 158% on its investment made in July 2021, all within a span of 18 months.
A report from Sportico earlier this year said Dyal Homecourt had $500 million in assets related to its NBA franchise stakes, up from $283 million reported in October 2022.
NBA team ownerships make up a small fraction of the total assets under management under Blue Owl. With a limited number of publicly traded sports teams, the stock could be one option for investors looking for exposure to the growth in the valuation of NBA teams.
Photo: simplistic.designs on Flickr.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
