Is A Sale Of The Bucks Inevitable?

Milwaukee Bucks owner Herb Kohl speaks with the media at Milwaukee Bucks Training Center. Mandatory Credit: Mary Langenfeld-USA TODAY Sports

*Editor’s note: This was a guess post from Justin Becker of FantasyBasketballMoneyLeagues.com. You can follow him on twitter at @NBAFantasyInfo, and you can follow the Fantasy Basketball Money Leagues Google+ Page. For more NBA basketball news visit FantasyBasketballMoneyLeagues.com, a fantasy basketball blog.

This past weekend, ESPN NBA analyst Bill Simmons dropped a bomb on Twitter:

The Bucks have been in Milwaukee ever since the franchise entered the league as an expansion team in 1968. They won the 1971 NBA title with Lew Alcindor and Oscar Robertson. They have also won two conference titles and 13 division crowns, but the team has not won a playoff series since 2000. Not to mention this season they own the worst record in the league.

Hitting rock bottom has added to their woes. The league gave the team a 2017 deadline to get an NBA-standard arena. And with the deadline nearing, a sale would be the easy way out. Although there have been talks in the last couple of years, things appear to be heating up.

New Investors

Rich Kirchen of The Business Journal reported on December 16:

“Kohl told The Business Journal in an interview that he anticipates the process (getting new investors) will take several months and he has retained Allen & Co. of New York City as his adviser”

Herb Kohl bought the Bucks for $18 million in 1985 and the team moved to the Bradley Center in 1988. Twenty-six years later, the arena was declared by the NBA as unfit for the league, and it has given the Bucks until 2017 to resolve the issue. Getting new investors appears to be the key to resolving this.

Per the same report, Kohl reportedly said:

“The process will start this week and will take as long as it needs to take. We will do whatever is necessary to ensure that anyone that joins the ownership is as committed to keeping the team in Milwaukee as I am.”

Last January 20, Gery Woelfel of the Racine Journal-Times wrote:

“In regards to the potential sale of the Bucks, I have been told there likely will be four serious suitors who’ll be more than happy to do business with long-time Bucks owner Herb Kohl. One is said to be a consortium of five or six individuals who are from Wisconsin or have Wisconsin ties.

Additionally, a source contends there is an individual from the Chicago area who has made it perfectly clear to Kohl that he’ll buy the franchise whenever the latter desires to sell. This offer, I’ve been told, has been on the table for several years.”

Chicago Buyer

Let’s look at the individual from Chicago first. It’s true that this story has circulated for years, in fact ESPN reported this on December of 2012:

“Stein (ESPN’s Marc Stein) earlier reported that Chicago billionaire Heisley, could make “a serious bid to buy the franchise” if Kohl can secure a new arena in Milwaukee or refurbish the BMO Harris Bradley Center. An upgraded arena in Milwaukee for the Bucks “would cement the team’s future in Wisconsin.”

Now who is Michael Heisley?

Heisley is the Chicago billionaire who owns Heico, a corporation that buys bankrupt companies and turns them around. He was the former Memphis Grizzlies owner who tried to bring the team to Chicago. Heisley made $377 million from the Grizzlies sale and was worth $1.9 billion in 2012. So he is definitely a guy with the cash, but with the new arena still in limbo, this deal looks headed to the shelves.

Local Buyer

The other hot issue right now is the “Wisconsin people.”

On April 8, Frank Madden of Brew Hoop provided this report:

“Jon Hammes’ construction company had been retained by the MMAC’s committee exploring the possibility of a new arena in Milwaukee. Now, Hammes has emerged as a possible investor in the team after SEC documents from late February revealed a planned $450 million private equity offering.”

When Sen. Kohl announced last December that he was scouting for new Investors, the Metropolitan Milwaukee Association of Commerce (MMAC) formed a 48-man task force to explore funding sources for Milwaukee’s sports assets, including the BMO Bradley Center.

Right after that, the MMAC hired Hammes Co. to explore options for a new arena. This move was seen as a gesture of the city’s support to help keep the Bucks in town. On the other hand, its owner is Jon Hammes. Hammes is a successful Brookfield construction firm owner and commercial real estate developer who built a major addition to Lambeau Field and built the Kohl Center at UW-Madison, which is named after Herb Kohl for his $25 million donation.

With Kohl’s “no-relocation” condition for the potential buyer, the logical buyer would be a local group. That leads the issue to Hammes for three reasons:

1. He is from Wisconsin, and that would satisfy Kohl’s primary requirement.
2. He is involved in the exploration for the new arena by virtue of his company, Hammes Co.
3. The $450 million private equity offering reported in February.

According to Forbes, the Milwaukee Bucks are valued at around $405 million as of January 2014. It’s unknown how much Kohl has priced the Bucks, if indeed he plans to sell all of it, but $450 million certainly surpasses the $405 million value quoted by Forbes.  This is, of course, purely speculation, but it is probable, according to Madden’s article.