HoopsHype Joshua Harris rumors

July 14, 2011 Updates

This is the fourth time in recent years that private equity executives have purchased an NBA team. The first was in 2002, when the Boston Celtics were acquired for $380 million by a group led by Steve Pagliuca (Bain Capital) and Wyc Grousbeck (Highland Capital Partners). Minority partners on that deal included Glenn Hutchins (Silver Lake Partners), Michael Marks (Riverwood Capital) and Jim Breyer (Accel Partners). Next up was the Golden State Warriors, acquired last year for $450 million by venture capitalist Joe Lacob (Kleiner Perkins). Lacob actually was a minority owner in the Celtics, and beat out fellow Celtics investor David Bonderman (TPG Capital) for the Bay Area club. CNN.com

Joshua Harris, leader of the Wall Street group that has reached a deal with Comcast-Spectacor to buy the 76ers, is a billionaire bottom-feeder who buys damaged assets cheaply and sells them at a profit. That's how Harris, 46, who grew up in suburban Washington and graduated from Penn and Harvard, has made his bread since the end of the 1980s, when he escaped the former junk-bond giant Drexel Burnham Lambert. That was after Harris' fellow Wharton graduate Michael Milken wrecked the firm with illegal deals and went to prison. Philadelphia Inquirer

Will Harris use his buyout expertise to cut costs and jack up sales for another underperforming asset, the Sixers? Don't count on it, says David Niles, a New York business strategist who counts pro sports teams among his past clients. "There are a lot of buyout financiers who own teams," he said. Mark Cuban, owner of the champion Dallas Mavericks, made his money in private equity. Cuban was initially an activist manager but in recent years has stood back while his pros ran the club, Niles said. Philadelphia Inquirer

Harris and his colleagues made a killing from the biggest financial calamity of our time: the bursting of the subprime mortgage bubble that forced millions of Americans from their homes and froze the economy. Apollo was an owner of WMC Mortgage Corp., a mortgage lender to subprime borrowers, which it bought in 1997 as the real estate bubble was gathering steam, and sold at a profit of nearly $500 million in 2004, as the market neared its peak. Since the crisis, Apollo has acquired, at deep discounts, nonperforming loans, bad debt, and other "distressed and buyout investments." The acquisitions originally were worth more than $45 billion, and were purchased from "motivated sellers," Apollo told the Securities and Exchange Commission in a report. As the U.S. bank bailout took hold and values recovered, Apollo estimated its profits from those investments, for 2009 alone, at more than 50 percent. Apollo has left a trail of litigation. Investors in Linens 'n Things, the bankrupt retail chain, are suing Apollo, "alleging violations of the Federal Securities Laws and the making of negligent misrepresentations." Philadelphia Inquirer

July 13, 2011 Updates

Comcast-Spectacor agreed Wednesday to sell the 76ers to a group led by New York City billionaire Joshua Harris. The deal, worth a reported $280 million for 90 percent control, still has to be approved by the NBA’s board of governors. The deal does not include the Wells Fargo Center or the Philadelphia Flyers, although the Sixers will remain a tenant of the building. Comcast-Spectacor chairman Ed Snider will retain 10 percent of the team, but will not have control over the team’s operations. Delaware News Journal

Harris, who is worth $1.5 billion, according to Forbes magazine, is a graduate of the University of Pennsylvania’s Wharton School of Business. “We are honored to have the opportunity to be affiliated with this storied franchise,” Harris said in a press release. “As a basketball fan who attended college in Philadelphia, and with family roots here, I have always felt a strong connection to this city and the 76ers. We look forward to helping the 76ers organization build on this past season’s accomplishments in the years ahead. The ownership group also looks forward to a long and mutually beneficial relationship with Comcast-Spectacor.” Delaware News Journal

Sources have put the value of the deal at $280 million for a 90 percent share of the team. Comcast-Spectacor and owner Ed Snider will retain 10 percent of the team, but will not retain operational control. Also, the deal does not include the Wells Fargo Center, which currently houses the Sixers and the NHL's Flyers. The Sixers will become a long-term tenant of the Wells Fargo Center, which should ease worries that Harris has any intention of moving the team. According to Comcast-Spectacor's press release: "The team will remain a long-term tenant of the Wells Fargo Center and will have a long-term cable broadcast agreement for its games with Comcast SportsNet Philadelphia." Philadelphia Inquirer

Now the deal must be approved by the league's board of governors. The NBA needs to approve the sale and they will be thorough in their investigation. It is difficult to say exactly how long that will take but according to Adam Silver, the NBA’s deputy commissioner, the process can be lengthy. “It's difficult to say how long the process would take before we see what the actual deal is but the process usually takes about two months,” he explained in an e-mail. “But it could be longer depending on how many background checks need to be conducted, the type of financing the buyers are using, etc. Approval does not have to be done in person but a group of owners would need to interview the buyers at some point before the board votes.” CSNPhilly.com

Comcast-Spectacor is in the final stages of negotiating terms of its sale of the 76ers to a group of investors led by New York billionaire Joshua Harris. Although multiple sources have confirmed that the deal is "not yet done," those same sources confirmed that the sale is in its final stages and that an announcement is expected any time, likely within the next two business days and even as early as Wednesday. Once the two parties have agreed on terms, the sale will go to the NBA's board of governors for approval. Despite the current NBA lockout - there is a moratorium on player movement, and communication between teams and players is barred - the sale of a franchise can still be processed. Philadelphia Inquirer

July 12, 2011 Updates

Comcast-Spectacor celebrated when they bought the Sixers in April 1996 from Harold Katz. There will be some high-fiving in the Comcast Tower in the next 48 hours to end the company’s ownership as well. “This is a great deal for Comcast,” said the source. The source said that the prospective new ownership group will remain committed to having its games televised on Comcast SportsNet for the foreseeable future, and will also remain tenants at the Well Fargo Center. Of the new owners, the source said “these guys are crazy,” to be making the deal. Philly Sports Daily

There was no immediate word on a sale price, which does not include the Wells Fargo Center or the NHL's Flyers, sources said Tuesday. David Blitzer of The Blackstone Group will join Harris as lead partner, according to sources familiar with the deal. Former player agent and Sacramento Kings executive Jason Levien also is part of the proposed ownership group, sources said. Apollo, which describes itself on its web site as specializing in "contrarian" investments and "distressed" assets, and Blackstone are not involved in the transaction. CBSSports.com

July 7, 2011 Updates

The Philadelphia 76ers likely will be sold to a group led by Joshua Harris, a director at Apollo Global Management LLC, in the next few business days, two people familiar with the negotiations said. Harris will pay about $280 million, according to one of the people, who were granted anonymity because they weren’t authorized to discuss the sale publicly. Harris co-founded Apollo Management in 1990, and holds a bachelor’s degree from the University of Pennsylvania’s Wharton School of Business and a master’s degree from the Harvard Business School. Apollo went public in March. Comcast-Spectacor, the holding company that owns the National Basketball Association team, said a month ago that it was exploring a sale. Bloomberg

Any rumor missing? E-mail us at   hoopshype@hoopshype.com.