LOS ANGELES — As the Minnesota Timberwolves begin arguably the most anticipated season in franchise history, the long-running battle for ownership of the team is approaching an important moment.
The arbitration hearings between current owner Glen Taylor and prospective owners Marc Lore and Alex Rodriguez are Nov. 4, just under two weeks after the Wolves open the season on Tuesday night in Los Angeles against the Lakers.
As the hearings approach, Lore and Rodriguez are positioning themselves to be ready to immediately purchase full ownership of the team, should things break their way, league sources told The Athletic. When Taylor first reached an agreement with Lore and Rodriguez on a step-by-step purchase of the team, he envisioned a scenario in which the third payment would give Lore and Rodriguez controlling interest in the Timberwolves and the Lynx of the WNBA. Taylor would remain on as a limited partner with a 20 percent holding.
But Lore and Rodriguez’s ownership group has $940 million in an escrow account that will be used to immediately buy out Taylor entirely should the two prevail in arbitration, league sources said. Lore and Rodriguez have assembled a deep-pocketed group that includes heavyweight minority investors like former New York City mayor Michael Bloomberg and former Google CEO Eric Schmidt. They have been working on plans for a new arena and other improvements should the arbitration panel rule in their favor.
What was once supposed to be a smooth transfer of power from Taylor to Lore and Rodriguez on a $1.5 billion valuation was thrown into chaos in late March when Taylor deemed Lore and Rodriguez to have not met the parameters of the deal. He called the deal off, proclaiming that the “Timberwolves and Lynx are no longer for sale.”
Lore and Rodriguez vehemently disputed Taylor’s interpretation of the deal, saying they had met every marker they needed to hit to fulfill their obligations and vowed to “use every ounce of effort to enforce the contract that Glen broke.”
In May, The Athletic spoke to several independent legal experts about the dispute, and they indicated that in their eyes Lore and Rodriguez had a strong case.
As Mike Vorkunov of The Athletic reported: At the heart of the clash is a roughly 1,500-word section of the sales agreement, which not only spells out the terms of the transaction but how it will be resolved now that those involved are at an impasse.
The disagreement lies, according to those who have examined the contract, over section 6.4(a), which stipulated that “the consummation of the exercise of each Call Option must occur, subject to prior NBA Approval, no earlier than sixty days following the Call Exercise Notice and no later than ninety days following the delivery of the Call Exercise Notice (which ninety (90)-day period shall be automatically extended by an additional ninety days if all NBA Approvals or other required approvals of any Governmental Entity have not yet been obtained).”
“If the buyer can establish that it did everything that it needed to do in terms of delivering the call exercise notice and submitting the information to the NBA then section 6.4A certainly reads as if they’re entitled to (it),” David Franklin, a lawyer for Cozen O’Connor, told Vorkunov. “Because it’s not a determination. It’s not a 90-day extension that sort of has any wiggle room to it. It specifically says which 90-day period shall be automatically extended by an additional 90 days if all NBA approvals have not yet been obtained. So if the buyer can demonstrate that it materially complied with its obligations to submit the application with all of the necessary information and they were simply sitting at home waiting for the NBA to say yes, then I read 6.4(a) to me that they get the benefit of that additional 90 days.”
Taylor has argued that the prospective buyers did not meet several benchmarks ahead of the closing, which gave him the right to call the deal off. In the intervening months, Taylor has remained the primary decision-maker as the Timberwolves have looked to build on last season’s run to the Western Conference finals. He was in the draft room when the Wolves acquired the No. 8 overall pick to select Rob Dillingham and he had the final say in approving last month’s trade of Karl-Anthony Towns to the New York Knicks for Julius Randle, Donte DiVincenzo and a first-round draft pick.
After Anthony Edwards and Jaden McDaniels received hefty raises, the Timberwolves have crossed the second apron threshold of luxury tax spending. Taylor has approved the spending for a team that enters the season with championship aspirations and told Timberwolves president of basketball operations Tim Connelly that he wanted to spend what it takes to compete this season.
Lore and Rodriguez are making preparations to pay the tax as well should they take over.
Taylor and his wife, Becky, were courtside throughout the Lynx’s run to the WNBA Finals. They also played host to the Timberwolves at their home in Mankato during training camp.
Both sides have gone through a series of depositions in the run-up to the arbitration hearings, which could take a full week to complete. After the three-person panel conducts the hearing, they will take some time to confer before issuing a ruling. That process could take up to a month.
The arbitration panel will not be taking into consideration anything outside of the purchase agreement the parties signed. Items like the luxury tax, arena investments and other facets connected to running a franchise would all fall under the purview of the Board of Governors. The arbitration process will strictly focus on whether Lore and Rodriguez fulfilled the contract or not.
If Rodriguez and Lore prevail, their ownership group will be brought to the NBA’s Board of Governors for final approval as team owners.
If Taylor wins, he will retain control of the Timberwolves. Lore and Rodriguez could remain on as limited partners or perhaps arrange a buyout to move on.
(Photo of Marc Lore and Alex Rodriguez: Michael Reaves / Getty Images)
