Pending sale of Minnesota Timberwolves has no limitations to moving franchise to a new city
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May 26, 2021, 10:19 PM
6 min read
Share to FacebookShare to TwitterEmail this articleMeyer Orbach, the second-largest shareholder in the Minnesota Timberwolves, filed a complaint in U.S. District Court in Minneapolis on Wednesday alleging that owner Glen Taylor's pending sale of the franchise to Marc Lore and Alex Rodriguez is in violation of the franchise's partnership agreement, according to a copy of the complaint obtained by ESPN.
The complaint cites Taylor's failure to honor the "tag-along rights" for minority investors in the franchise, which allows them to sell their interests in the teams before Taylor sells his own.
A vote of the NBA's board of governors is still required to give final approval of the sale to Lore and Rodriguez.
The complaint filed by Orbach, a New Jersey real estate mogul who owns more than 17% of the Timberwolves and WNBA Lynx, also includes a significant revelation: Despite Taylor's public statements to the contrary, he has included no provision in the $1.5 billion sales agreement with Lore and Rodriguez that requires the new ownership group to keep the franchise in Minnesota upon taking control of the team, according to an exhibit in the complaint.
In fact, new details of Taylor's sale agreement with Lore and Rodriguez -- expected to be completed by July 1 -- include a clause under "Governance Matters" that lists several actions that would require new ownership to "present to the Advisory Board for discussion" -- including any plan to "relocate the team outside of the Twin Cities market."
According to an exhibit in the complaint, the agreement between Taylor and the Lore-Rodriguez group acknowledges that the "Advisory Board is advisory only ... and no action ... requires the approval, in any form, by the Advisory Board to be effective."
Essentially, there are no contractual limitations to keep Lore and Rodriguez from moving the Timberwolves and Lynx to a new city.
The language of the sales agreement between Taylor and prospective owners Rodriguez and Lore is in contrast to Taylor's numerous public comments that the sales agreement would include a provision requiring the new group to keep the Timberwolves in Minnesota. "They will keep the team here, yes," Taylor told the (Minneapolis) Star Tribune on April 11 about the Lore and Rodriguez ownership group. "We will put it in the agreement. At this point, we have a letter of intent, but when we make up the contract, we'll put that in there. That's no problem. That won't be a problem."
Several days later, Taylor reiterated to WCCO radio in Minneapolis: "We have it in the contract. They have signed the contract to do that ..."
Taylor then said this: "But let's just say somehow they were able to break that agreement. The real agreement is with the NBA. The NBA will make the decision if somebody's going to move or not move. The NBA will not approve the Timberwolves moving from here to Seattle. It's in the NBA's interest that in Seattle a new team is formed.
"It's an economic decision that's in the interest of all the owners because if they start a new team out there, that team is going to have to pay maybe $2 billion to get started there. They pay that to the other owners. The present owners are not going to pay a billion and a half to leave it in Minnesota and another $2 billion to move it out of there. That's the assurance I have that they aren't going to move it out of there."
Lore and Rodriguez are expected to buy the team in installments, first becoming limited partners and then growing their percentage until they assume a controlling stake for the 2023-24 season. The sequencing is expected to include a purchase of 20% of the team in 2021, sources said.
Essentially, Orbach's complaint says that the tag-along provision is supposed to be exercised immediately upon the finalizing of Lore and Rodriguez's agreement to buy the team.
According to the complaint, "When Orbit [Orbach's company] attempted to exercise its tag-along rights, Taylor not only ignored Orbit but also privately stated -- contrary to his public statements -- that he's not proposing to enter into a "control sale" with Rodriguez and Lore at this time. Instead, Taylor is claiming that any "control sale" will be years in the future, and therefore Orbit currently does not have any tag-along rights."
