Mark Cuban sold $3.5 billion majority stake in Mavs to the Adelsons
- Thread starter RedOctober3829
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Maybe via different classes of equity where one class has board seats, the other has 51% (whatever the # is) of the earnings and assets. Sounds potentially like a pretty big conflict of interest.
Just Ballparking in a vacuum.
Ask Mark Zuckerberg.
(Multiple classes of shares, one of which has disproportionate voting power, but the other gets all the economic value of a sale / annual profits)
Lots of different ways you can structure a transaction to achieve the end result.
I have seen some reporting which expresses surprise at the relatively low valuation for the Mavs - without acknowledging that acquisition does apparently come with control off the entity. A discount for lack of control is pretty standard in any business valuation.
Cuban wanted the cash, but also wanted to make sure he had an inside track on the sexual harrassing
That was my first thought. Seems like the opposite of what you would want in that case, keeping control of basketball ops but giving up passive income. Hard to imagine doing the whole candidate/maybe president thing while also running a team.
You’re right - that would be a strange decision.
Thanks for making me feel better.
I wish we could have seen the look on Kyrie’s face when he learned his new boss is Miriam Adelson.
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I guess the flip is that some of the Mavs value is derived from their association with Cuban. Separating him from the team devalues the asset. I really don't know. Just a guess. Or he's a billionaire and does whatever the fuck he wants and the thing he wants to do is run the Mavs? These are probably equally likely things.
Shark Tank was also a tremendous time suck. I met Mr Wonderful and he said it is 7 hours of filming per episode. Mark has better things to do with his time.
I'm a little behind, what is the deal structure that he is giving up passive income? Like what is he getting right now? If it is $3.5B are we sure he was pulling more income from the MAVS than he can earn on $3.5B cash? I did not think these franchises were cash cows like that. I thought the benefit of owning is asset appreciation. 3.5B earning 5% is $175M
The benefit of owning a sports team is never paying taxes as you depreciate the entire purchase price until you die and your kids inherit it at a stepped up basis. Or it goes up 10x and you take your billions....
I think the real play here is trying to get legalized sports betting in Texas, having a casino near the area and a tax shelter for Adelson.
It is astonishing to me (but not really surprising) that TX doesn’t have legalized sports betting at this point. Imagine what they’d pull in allowing Draft Kings and all them there.
It's control of *basketball operations only, not the entity as a whole. He's shown that he's a capable basketball executive. If I'm the Adelsons I'm fine with letting him maintain that control for a time. Since they don't yet know the business, Mark Cuban is probably a better bet to run the on-court operation than whatever Replacement-level Basketball Executive they can get by fishing in the open ocean. I'm sure that there is some kind of buyout clause built into the deal, either after a set length of time or by Adelson's election or Cuban's or both (and for gross misconduct too).
For Cuban, he gets a massive return on his initial investment. He can park all that cash, live very nicely off the interest of the interest, and do the fun part of the job. Why not.
For Cuban, he gets a massive return on his initial investment. He can park all that cash, live very nicely off the interest of the interest, and do the fun part of the job. Why not.
Why would they get a replacement level exec? Couldn't they offer the job to an up and coming assistant GM or poach someone away from their current gig? Having Luka on your team is a very enticing opportunity for a GM
Yeah I would guess Cuban's clock has started and he may get removed at some point, especially if this team keeps coming up short of the finals.
Cuban with no controlling stake feels the prime example of someone easily replaceable - assuming the terms of the actual agreement don't make it too punitive for Adelson.
Cuban with no controlling stake feels the prime example of someone easily replaceable - assuming the terms of the actual agreement don't make it too punitive for Adelson.
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The "clock" is basically through the current season unless there is an unusual agreement, in order to not upset the apple cart immediately. If the Mavs somehow miraculously win the Finals* then maybe they draft a new agreement with Cuban on the basketball ops side.
* More likely than having playoff success, Kyrie finds this season is too peaceful as opposed to his previous few stops and uses the new owner's nationality to once again make outrageous "look at me" statements to submarine his team.
* More likely than having playoff success, Kyrie finds this season is too peaceful as opposed to his previous few stops and uses the new owner's nationality to once again make outrageous "look at me" statements to submarine his team.
Sure. The point being that I don't know if the Adelsons have the savvy to identify and hire that person. Or, if they themselves feel that they don't.
The Mavericks have underperformed toward the tail end of Cuban's tenure, but he is a proven NBA exec. Keeping him around for a year or two while they learn the business - even possibly to help hand-pick his successor - is sensible.
This is succession planning 101 for mature companies in widget-making industries that are much easier for an outsider to grasp. In the NBA, where success comes down to a handful of transactions, with enormous upside and potentially catatstrophic downside, where the application of esoteric knowledge is key, I can see why they might not want to choose his successor to run the on-court operations. Hell, the most crucial such transaction is the executive himself.
Interesting times for the Mavericks! Cuban's move from controlling stake to basketball operations raises questions about the team's future. Excited to see the impact on their game and the strategic decisions ahead.
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When the person running things is also the one whose bank account is impacted, the objectives and reporting lines are all very clear and aligned. Will be interesting if they end up in a situation where they have to make luxury tax decisions. It’s one thing to have an NBA team as your hobby that you lose money on, and another thing if you consider it to be a profit generating business.
Marc Lasry and now Cuban selling in the last 6 months is a little eye-raising, two of the smarter market timers amongst NBA Owners.
I'd guess they may want to be able to do other things in the space (ie gambling/Rubin - 76ers)
I'd guess they may want to be able to do other things in the space (ie gambling/Rubin - 76ers)
