Co-owner Meyer Orbach cried foul in federal court over Glen Taylor’s proposed sale to Alex Rodriguez and Marc Lore.
Alex Rodriguez’s chosen rebound move just weeks after breaking up with Jennifer Lopez — a $1.5 billion purchase of the Minnesota Timberwolves with business partner Marc Lore — may have hit a roadblock.
Though T-Wolves governor Glen Taylor already agreed to sell his majority stake to A-Rod and Lore, the NBA Board of Governors has not yet approved the transaction. Minority investor Meyer Orbach, who owns 17% of the Wolves and the WNBA’s Minnesota Lynx, filed a complaint Wednesday in US District Court in Minneapolis alleging that the pending sale violates the franchise’s partnership agreement, reports Adrian Wojnarowski of ESPN.
In other words, Orbach claims the whole deal is invalid.
According to the complaint filed by the New Jersey real estate magnate, who’s also the team’s second-largest shareholder, Glen Taylor failed to honor the “tag-along rights” for minority investors, which allows them to sell their own shares in the franchise before he sells his own.
“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,” according to the legal complaint.
That may technically be true, as Taylor’s proposed sale to the retired slugger and Lore would reportedly be carried out in installments. Only 20% of the Wolves, Lynx, the G-League’s Iowa Wolves, and the NBA 2K League’s Wolves Gaming will be transferred in 2021. A-Rod and Lore wouldn’t assume a controlling stake in the franchise until the start of the 2023-24 season, possibly delaying the control sale until that time.
“Although the deal with Rodriguez and Lore was structured in a clumsy attempt to circumvent Orbit’s tag-along rights, it does not deprive Orbit of its tag-along rights,” Orbach’s complaint contends. “The tag-along rights are triggered regardless of whether control is transferred ‘in a single transaction or a series of related transactions.”
Orbach also alleges a separate bombshell: That contrary to numerous statements from Taylor, a sale of the Timberwolves to A-Rod and Lore would not necessarily preclude a potential relocation of the team.
The deal, expected to be completed by July 1 according to ESPN’s Woj, includes a “Governance Matters” clause that would require new ownership to present a plan to the team’s advisory board before relocating the franchise away from the Twin Cities market. But the complaint alleges that the agreement between Taylor and A-Rod’s group doesn’t include sufficient language to protect against the Wolves packing up and moving out of town.
It should be noted that even though there would be nothing contractually in the sale that would prevent Lore and Rodriguez from moving the Wolves, any franchise relocation requires league approval.
And though it looks like A-Rod is still going to get to own an NBA team, this new complaint could throw a wrench into the proceedings and make the process far, far uglier than it was ever supposed to be.
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