Revenue for most professional sports teams is fairly predictable.
This happens when the owner passes away or doesn’t know how to pass the team on to his family. They run out of money, focus on other things, or get kicked out for cheating.
Once the decision to sell is made, the process proceeds in a relatively public manner. A banker is hired, potential buyers register their interest, an auction is held, and news media coverage occurs over the next few weeks or months.
So, without warning last month, the family that controls the Las Vegas Sands casino empire announced that it had reached a binding agreement to buy control of the National Basketball Association’s Dallas Mavericks from Mark Cuban. It was a complete surprise. The only thing that made sense was that the situation involved Mr. Cuban, who has long run the Mavericks in an unconventional manner.
Still, more than two weeks later, the fundamental question surrounding the sale remains: Why did Mr. Cuban do it? — remains largely unanswered. The always talkative Mr. Cuban, who always seemed to have more fun than other owners, declined to speak on the record for this article. The Adelson and Dumont families, cautious about getting ahead of the NBA’s approval process, which includes due diligence and a vote on the sale by other team owners, declined to comment beyond expressing excitement.
But what is clear is that the sale provides a window into the rapidly changing nature of the sports business.
When Mr. Cuban bought the Mavericks in 2000 with the cash he earned from selling Broadcast.com just before the dot-com bubble burst, professional sports teams were still largely just teams.
Now they are the anchor of large companies. Like in Sacramento, the arena’s anchor tenant is the heart of a vast entertainment complex. Anchor content for regional sports networks and other media conglomerates like Washington, DC. Anchor brands like Phoenix for millions of fans who are newly allowed to bet on sports.
Mr. Cuban is also a dot-com billionaire, owner of a company trying to lower prescription drug prices, and one of the main investors in the reality show “Shark Tank” for another season, among other things. He is a person with many different faces, but what exactly does he mean? He is not a real estate mogul, which could be a motive for the sale.
The Dallas Mavericks own a portion of the American Airlines Center and play their games at the Victory Park development just north of downtown. But while his co-tenant, the owner of the National Hockey League’s Dallas Stars, has invested in land near the arena, Cuban has expressed frustration primarily with the loss of fan parking. Now he has changed his attitude.
“The Cubans are probably going to copy what’s worked in the past, take ownership that Victory Park doesn’t have, and create a new, integrated casino and resort,” said Robert Sroka, a sports management professor at Georgia State University. We want to push it to the next level.” Sports venue development consultant.
Last year, Cuban told the Dallas Morning News of his intention to partner with the Suns on a very new arena and casino complex.
“There’s literally no reason why we can’t partner with Sands Corporation and build a huge resort in the city of Dallas,” he said.
Some of those destinations would mean far more money to Mr. Cuban than the amount generated by game tickets or arena concessions. But the plan faces major hurdles besides acquiring land, obtaining high-interest loans and obtaining construction approvals. Almost all forms of gambling are illegal in Texas, but there are no clear signs that that will change.
A bill to legalize sports betting passed the Texas House of Representatives this year, but Lt. Gov. Dan Patrick declined to send it to the Senate for consideration. Even if such a bill were to pass the Senate, Texans would still need to vote on it.
The bill allowing casinos faced even more fierce opposition, especially from influential conservative religious leaders, and never passed the House. Sports betting could be lucrative for teams if it were legalized in Texas, but a casino bill would actually need to be passed to realize Cuban’s vision of a sports and gambling destination. . Sands operates numerous casinos in Macau and Singapore but currently has no casinos in the United States, although it has hired dozens of lobbyists in recent years to help pass casinos.
Mr. Cuban owns about three-quarters of the Mavericks, with the rest held by minority owners. After the sale, he will own about a quarter of the property, the Adelson and Dumont families will own nearly three-quarters, and the rest will be distributed among a handful of owners, according to two people familiar with the terms. Two people familiar with the terms spoke on condition of anonymity as the matter is not public. authorized to publicly disclose them.
Some people believe that the $3.5 billion valuation that Cuban is reportedly selling for is lower than the valuation the Mavericks could have earned had they hit the public market. There is. Just last week, for example, a portion of the Indiana Pacers was acquired at a reported valuation of $3.47 billion. Indianapolis is a much smaller market than Dallas, and minority stocks are typically discounted. In other words, the idea is that the sale of a majority stake in the Mavericks should have been done at a much higher price.
But the sale to the Adelson and Dumont families includes an unusual condition: Cuban continues to run the team’s basketball operations.
Officially, Patrick Dumont, son-in-law of Miriam Adelson and the late Sheldon Adelson, will be what the NBA calls the team’s governor, voting on league-wide issues. But Mr. Cuban plans to run the basketball business.
So the bet seems to be this. Cuban will make billions for the team, which paid him $285 million 20 years ago. He will continue to be involved in the part of team ownership he loves most. And if the Adelsons and the Las Vegas Sands can power through their new arena and casino complex, one day a quarter of his team will be as big as the three-quarters he once owned. It may become valuable.
It could also help make up for the money Cuban expects to lose on the team’s local media rights deal. The holder of these rights, Diamond Sports Group, is in bankruptcy.
“I think a new arena, real estate area and hopefully a future resort casino will help make up for the loss in media and provide funding for the Mavs now and in the future,” Cuban said in an email to a local TV station last month.
The sale greatly expands the race for an NBA franchise in Las Vegas, which is more than 1,000 miles west of Dallas and was widely considered to be the frontrunner if the Adelson family acquired the team.
Officially, there is no guarantee that Las Vegas will have an NBA team, but the league is widely expected to expand from 30 to 32 teams soon. This summer, league commissioner Adam Silver said the league would address the following issues: He isn’t sure if the league will expand, but cited Las Vegas and Seattle as cities being considered.
“There’s a lot going on behind the scenes,” said former Nevada Gov. Steve Sisolak. “Many groups are interested. It remains to be seen who will be the frontrunner.”
Currently, the only arena in Las Vegas that comes close to the facilities needed for an NBA team is T-Mobile Center, which is co-owned by arena developers AEG and MGM Resorts International with NHL owner Bill Foley. The Las Vegas Golden Knights own a minority stake.
But Oakview Group, another arena developer and operator, announced plans for a $10 billion resort south of the Strip that would include an arena where NBA teams could play. Interestingly, the land where the arena will be built is owned by Scott Goldstein. , son of Las Vegas Sands CEO Rob Goldstein. Sands is not currently involved in the project.
susan beachy Contributed to research.