Michael Jordan has agreed to sell a large piece of the Charlotte Hornets to two New York-based investors, a sale expected to close in the next few weeks that was first reported by the Observer.
A source familiar with the deal said it does not involve the former NBA Most Valuable Player giving up majority ownership of the NBA franchise. Jordan controls about 97 percent of Hornets equity, two sources confirmed.
Jordan is bringing in Gabe Plotkin, a founder of Melvin Capital, and Daniel Sundheim, a founder of DI Capital. Both prospective owners must be approved by the NBA, but that process is already underway and the sale is expected to close quickly, a league source confirmed.
“While I will continue to run the Charlotte Hornets, make all decisions related to the team and organization, and remain the team’s NBA Governor, Gabe and Dan’s investment in the team is invaluable,” Jordan said in a statement released by the Hornets. “Gabe and Dan are industry standard-setters and proven leaders, with a belief in philanthropy and a passion for basketball. They share my commitment to Charlotte and the Carolinas.”
Jordan paid Bob Johnson about $180 million in 2010 to take majority control of the expansion franchise. A source familiar with Jordan’s thinking said he plans to remain the Hornets’ primary owner “for a long time.”
The percentages Plotkin and Sundheim are buying have not been revealed, nor has the price they are paying. In February, Forbes estimated the Hornets were worth about $1.3 billion.
A source familiar with the deal said Jordan is attracted to adding investors with deep resources who might offer new ideas regarding technology advances. Jordan has some minority investors who own small shares of the team that all pre-date his buying control.
Neither Plotkin nor Sundheim has previous ownership experience with major-league teams. Plotkin’s hedge fund reportedly manages over $3.5 billion in assests. A report in April 2018 had Sundheim raising $4 billion for his hedge fund.
Jordan is the only former NBA player with a controlling stake in one of the league’s 30 franchises. Forbes recently estimated Jordan’s personal fortune at roughly $1.9 billion. Since becoming an NBA owner he has become deeply involved in the league’s labor relations, sometimes serving as a “translator” between owners and players.
The former star of the Chicago Bulls, who won a national championship with North Carolina in 1982 and grew up in Wilmington, made hundreds of millions off the court, particularly with the still-iconic “Jordan Brand” division of Nike.
Jordan bought the then-Bobcats from BET founder Johnson in March 2010 at a deep discount. According to an NBA source familiar with the deal, Jordan paid cash and debt assumption for roughly 65 percent of the asset. His stake has grown, partially because his partners often didn’t participate in cash calls in years when the team lost money.
The NBA initially sold the franchise to Johnson and a group of mostly Charlotte-based investors for $300 million in 2004. Jordan’s purchase was based on an appraised value of $287 million for a team that lost money with regularity its first few seasons.
Forbes’ $1.3 billion estimate put the Hornets 28th among 30 NBA franchises in the financial magazine’s value rankings, topped by the New York Knicks at $4 billion.
While the Hornets have struggled on the court, failing to reach the playoffs each of the past three seasons, the business operation has been more successful. Team president Fred Whitfield recently said season-ticket renewals were around 80 percent this off-season and that the team has done well with sponsorships.
The Hornets manage Spectrum Center, the city-owned uptown arena, meaning they either get the profit or are responsible for any losses connected to the building. That means the team books concerts, shows and other sports events in the building.
Spectrum Center has already hosted the NBA All-Star game (last February), plus ACC and CIAA basketball tournaments, the NCAA tournament, and the 2012 Democratic National Convention. The building will be the site of the 2020 Republican National Convention.
Under Jordan’s ownership, the team rebranded in 2014 to Hornets — the nickname of the original Charlotte NBA franchise, which left for New Orleans in 2002 — after that team renamed itself the Pelicans. The return to that nickname and the original team’s purple-and-teal colors and logos were a huge hit with fans.
The Hornets’ local television rights are held by Fox Sports Southeast. WFNZ-AM 610 is their radio flagship in Charlotte.
As a small-market franchise, the Hornets annually receive millions in revenue-sharing from the NBA office. That comes in part from luxury tax some teams pay for excessive player payrolls.
In his nine seasons as Hornets owner, Jordan has never paid luxury tax, and that played a role in the team losing star point guard Kemba Walker, who signed with the Boston Celtics in July.