Herb Kohl Rumors
Negotiations are under way among the Milwaukee Bucks, city and state officials on how to pay for a $500 million new arena or face franchise relocation. The Bucks’ current owners, Marc Lasry and Wes Edens, have committed $150 million, and the former owner, Herb Kohl, has committed $100 million. Republican Gov. Scott Walker, a presidential hopeful, has proposed borrowing $220 million, but his party’s legislature is fighting him on it and wants the state’s contribution to be closer to $150 million.
As for the arena, Lasry acknowledges its shortcomings. The Bucks’ home locker room is outclassed by that of many major college programs, and their practice facility is an annexed building of a Catholic archdiocese. Lasry and Edens have pledged $100 million to build a new arena, as has former owner Herb Kohl. They are still searching for ways to fund the rest, while the location has been narrowed down to three sites. Lasry says they hope to settle on one in the next month or so, after which things should begin to move quickly. “It is a process, and it’s challenging,” Lasry said. “We are trying to get the best site where we can do the best for the city. For as many people who want you to do something somewhere, there are as many people who don’t want you to do something somewhere.”
So, it wasn’t surprising that when Kohl recently sold his NBA franchise, he didn’t forget about the people who worked under him. You may have read where Kohl gave gifts of $500 to employees at the BMO Harris Bradley Center, where the Bucks played their home games. What you haven’t read, though, is that Kohl’s generosity extended much further. He also bestowed significant financial gifts to others in the organization, from secretaries to sales personnel to basketball operations officials. The amount Kohl gave those employees varied and was based on different criterion, not the least of which was longevity with the organization. Some Bucks employees received $40,000 while others received nearly $100,000. And there were even some individuals who were given checks that one person close to the situation described as “life changing.”
There was widespread chatter among Bucks officials and even some NBA executives that Kohl was livid with Hammond and, if he had maintained ownership of the team, would have fired him after the season. But Hammond, the NBA’s Executive of the Year in 2009-2010, is still overseeing the basketball operations and Drew is heavily involved in draft preparations. Thursday, during an informal gathering with a group of media, Lasry and Edens expressed their support for Hammond, Drew and Morway. “I think, on the basketball side right now, John, David and Larry, at least from all the dealings we’ve had, they have been doing a great job,” Lasry said.
The Milwaukee Bucks are officially under new ownership, as the NBA’s Board of Governors unanimously approved the sale of the team Thursday from Herb Kohl to Wesley Edens and Marc Lasry. Lasry and Edens, New York-based hedge fund billionaires, agreed to purchase the franchise from Kohl for $550 million on April 16. It took nearly a month for the deal to become official, but the Bucks now are no longer under the control of Kohl for the first time in 29 years.
A source with knowledge of the sale process said Monday the sale of the Milwaukee Bucks to New York investors Marc Lasry and Wesley Edens “is moving quickly.” “It’s possible there will be news later this week,” the source said. Former senator Herb Kohl is selling the team he has owned since 1985 to Lasry and Edens for $550 million, which includes assumed debt. In addition, Lasry and Edens have committed $100 million toward the cost of a new arena, as has Kohl.
Kohl’s last day in the Senate was Jan. 2 after 24 years. His sale of the Bucks, of which he is the sole owner, still requires NBA approval. The buyers are New York City investment executives Marc Lasry and Wesley Edens. “Some people will look at it and say, ‘Herb Kohl is making $550 million on this,’” Kohl told me. “I’m saying, ‘Hey, that’s not true.’ It’s a business that has risks. When I bought the team, the NBA was a very small, shaky enterprise. There were many problems in the NBA when I bought this in the middle-’80s. Some of my investments have turned out better, some worse.”
After the news April 17 that Kohl agreed to sell the Milwaukee Bucks for $550 million, I asked him about the return on his initial 1985 investment of $18 million to $19 million. Kohl pointed out that he had spent “well over $100 million” keeping the Bucks in business and went into debt with the NBA, but would not give a specific dollar figure. “I didn’t invest for the money and it doesn’t take into account the money I’ve put in over the years to keep the team afloat during the times when the (NBA’s) economic model was broken,” Kohl told me. “It was well over $100 million, so you can just start subtracting from what I received here.”
Herb Kohl tapped the NBA’s revolving loan fund twice in 2009 and three times in 2010, according to personal financial filings from his final year in the U.S. Senate that shed light on his statement that he spent “well over $100 million” keeping the Bucks afloat. “I went into debt,” Kohl told me in an interview. “The league has a credit facility and we got to the limit of what we could borrow. It turned out fine. I have no complaints on the money side.”
The NBA has the right to buy back the Milwaukee Bucks from incoming owners Wesley Edens and Mark Lasry if a deal to a bring a new arena to the city is not in place by November 2017, according to sources briefed on the situation. Sources told ESPN.com that the sale agreement announced last week to transfer the Bucks from longtime owner Herb Kohl to Edens and Lasry for a purchase price of $550 million includes a provision that allows the league to buy back the team for $575 million if construction on a new building in Milwaukee is not underway by the deadline.
Dallas Mavericks owner Mark Cuban considers the sale price of approximately $550 million for the Milwaukee Bucks to be a bargain, suggesting the true value of NBA franchises is north of $1 billion. Longtime Bucks owner Herb Kohl announced Wednesday that he had reached an agreement to sell the team to hedge-fund billionaires Wesley Edens and Marc Lasry, a deal subject to approval by the NBA and its board of governors. “I think they got off cheap,” Cuban said. “I think that was a bargain. I think it’s worth a lot more. I think it’s worth a lot more than that. I think someone got a bargain. You can’t look backwards. You’ve got to look forward. You don’t value teams based off what happened in the past.”
Edens said pending league approval of the purchase, he and Lasry would begin to speak with the basketball staff and others in the organization. “It’s Day 1 for us,” Edens said. “And it’s a process. We’ve had a lot of experience in investing in various businesses and successful ones are run by great organizations. We’re all about hiring the right people and having the right people in place. “We think there are a lot of terrific people in the organization. We haven’t really spent any time assessing people in the organization in any meaningful way. We’re going to figure it out.” Edens said, “Obviously there’s a big draft coming up and there’s a talent assessment going into that.” “We’ll start immediately but it becomes in earnest once we have closed on the transaction.”
The ownership change creates plenty of uncertainty for the Bucks management team led by general manager John Hammond and the players and coaching staff. Hammond and coach Larry Drew both have two years remaining on their contracts, and the Bucks are coming off the worst season in franchise history — a 15-67 effort that has earned the team the best chance in next month’s NBA draft lottery of landing the No. 1 pick. “It’s life; it’s a business,” Kohl said. “They understand. Whether we have new management, I would have the same choices to make (if he had remained team owner). “I hope good things happen for everybody, but you’re running a business. It involves making choices. By the way, it’s never come up.
Bucks owner Herb Kohl was well past retirement age and realized it was time to secure the future of the franchise. He had one big caveat for any potential investors: Keep the team in his hometown of Milwaukee. And he found a buyer. The former U.S. senator is banking on New York investment firm executives Marc Lasry and Wesley Edens to follow through after agreeing to sell them the Bucks for about $550 million. The deal is subject to approval by the NBA and its board of governors. “I wasn’t going to live forever. I’ve approached a time in my life where I have to think about … how do we think about succession,” Kohl, 79, said Wednesday at a news conference in the atrium of the BMO Harris Bradley Center. The deal was announced hours before the team was to play its final game of a dismal season.
Forbes recently listed the Bucks as the least valuable franchise in the NBA at $405 million, which means the team sold for a 36 percent premium on their valuation. The Bucks are in the smallest market with one of the worst arenas in the NBA, so why were billionaires lining up to buy the NBA’s least valuable team?
The Milwaukee Bucks won’t be moving any time soon. Today, Herb Kohl reportedly sold the Bucks to hedge fund billionaires Marc Lasry and Wesley Edens for $550 million. Bidding for the team has been open since December, and rumors circulated that the Seattle duo of Steve Ballmer and Chris Hansen were interested in purchasing the team. However, Kohl made a condition of the sale that the team would stay in Milwaukee.
One reason is that NBA teams have cost certainty until 2017 based on the most recent collective bargaining agreement (CBA). There is a slim chance the CBA could last until 2022. However, that is doubtful due to the NBA’s upcoming new media deal driving up the valuation of small-market teams, such as the Sacramento Kings and (drum roll) the Bucks.