Byline: BILL SHEA
In the hours after the Detroit Pistons sale was finally officially announced Friday, what fans wanted to know was 'How much did Karen Davidson sell the team for?'
No one involved in the deal was saying, but the number was expected to eventually leak out -- possibly over the weekend.
Sports insiders caution that the price, expected to top the Forbes.com estimated value of $360 million, should be taken with a grain of salt.
Whatever the Pistons price tag is, it's likely to be the final amount new owner Tom Gores pays Karen Davidson -- not what he's writing a check for now.
A source familiar with the situation said that Davidson will retain an equity stake in the team and Palace Sports & Entertainment Inc. That stake will decrease as Gores, a Los Angeles private-equity billionaire who focuses on turnarounds, continues to pay for his increasing share of the franchise.
What will be difficult, without a copy of the sale agreement, is figuring out what is apportioned in the sale price to the team and to the venues. There also is value in lesser-known aspects of the assets, such as the full TV studios inside The Palace of Auburn Hills.
Sports franchise sales can be more complex than Wall Street deals.
'Sometimes it's not as clear-cut as it would be on your typical M&A market,' said Michael Rapkoch, president of Addison, Texas-based Sports Value Consulting LLC. 'You don't know how much all the other assets are worth and how they contributed to the sale.'
He noted that the 2009 sale of the San Diego Padres for $500 million was an incremental deal over five years, a transaction he termed as one of the more complicated in recent years.
The $175 million sale in February of the Buffalo Sabres, on the other hand, was more straightforward, Rapkoch said.
The Pistons deal includes Palace Sports, the umbrella corporation for the Pistons, The Palace and DTE Energy Music Theatre, and holder of the contract to manage Meadow Brook Music Festival for Oakland University.
Comerica Bank is financing the sale, according to the Friday press release on the deal, expected to be completed by June 30. The league's other owners must approve it.
Initial reports earlier this year of a deal between Davidson and Gores had the sale price at $420 million, but negotiations lagged as the sides haggled over the final price and terms.
Insiders also said it's in the best interest of the NBA and its owners to have gargantuan sale prices. That helps drive up the sale of the next team.
The Forbes.com value estimate from earlier this year of $360 million represents a $119 million decline in value over 12 months. The financial news website attributed the lost value to declining attendance and the Detroit-area economy.
In January 2010, Davidson announced that she intended to sell the franchise bought by her late husband, who also was chairman of Guardian Industries Inc. He picked up the Pistons for $8 million in 1974 from Fred Zollner, who had moved the franchise to Detroit from Fort Wayne, Ind., where Zollner founded the team in 1957.
The remaining 24 percent of the Pistons was split among several people, who agreed to sell their shares when Davidson sold the majority.
Copyright 2011 Crain Communications Inc. All Rights Reserved.
