A World Series champion is taking over basketball’s biggest loser.
Three-time AL MVP Alex Rodriguez and Jet.com founder Marc Lore have agreed to buy the NBA’s Minnesota Timberwolves, currently and historically the league’s worst franchise, for a cool $1.5 billion.
Slam Dunk Investment
After a year of mostly empty stadiums, it may seem like an uncertain time to buy a sports team (forgive us Minnesotans, but especially a bad one). However, according to Forbes, the average NBA team profit fell just 10% during the pandemic to $62 million:
- Amazingly, every single NBA franchise managed to turn positive operating income last year thanks to mammoth TV deals which remained intact and reduced player salaries negotiated under the league’s collective bargaining agreement.
- And optimism for the future of basketball meant the average NBA team actually appreciated in value in 2020.
Swing Away: Rodriguez and Lore will initially join the Timberwolves as limited partners, and obtain control of the team by 2023. The blockbuster price tag shows just how high sports franchise valuations have skyrocketed in recent decades:
- Current owner Glen Taylor bought the team for $88 million in 1994. That’s a 17-fold return on investment.
- Rodriguez and Lore paid a slight premium: the latest Forbes franchise valuation pegged the Timberwolves at $1.4 billion.
A former Mariners and Yankees star who retired from baseball in 2016, A-Rod has been an active investor since hanging up the cleats. He recently got in on the SPAC craze with his Slam Corp., which started trading earlier this year. Lore, his Timberwolves investment partner and a former Walmart executive, is a special adviser to Slam.
Take the L: The Wolves, who have never won a championship and have only made the playoffs once since 2004, have the worst winning percentage of all American pro sports franchises.