A Very American Coup By Michael – Louis Ingram, Editor-in-Chief...
Davis Should Have Partnered With A BE 100 Member To Make This Deal Happen
Just like the former NFL deal in which Reggie Fowler tried to buy the Minnesota Vikings as the majority owner, Davis’ deal with Michael Heisley of the Grizzlies fizzled almost as fast as the news was that he was going to be the second Black owner in the NBA.
So what happened with this deal? How did this not materialize in a fashion that would have been perfect for 2007 as a news item? The bottom line was that Davis didn’t have the cash and he simply did not partner up with the right people who could have gotten the deal done.
If Davis wanted to keep his majority group African American based, he should have partnered up with someone who was on the Black Enterprise 100 list.
Davis’ non-disclosure of his ownership group sunk the plan faster than the iceberg that did the Titanic in. Trying to be secretive not only derailed the attempt in the eyes of the NBA, it soured the Memphis community.
Yet what is ironic is that Davis is a majority owner of DC United, the Major League Soccer team in Washington, D.C. Who is the majority owner of the team? Victor B. MacFarlane of MacFarlane Partners, a real estate asset management group with $11.7 billion in assets under management.
So why didn’t Davis try to go the route that Fowler did when the first plan of attack at ownership was failing? When Fowler’s bid to be majority partner was in jeopardy, Fowler quickly allowed his chief minority partner, Zigi Wilf, to become the majority partner in the deal.
While this may be two totally different sports, the business model is still the same principally wise. For Davis it would have actually been better.
If MacFarlane was a part of the group, flip flopping positions would only solidify the deal and make it that more attractive to the league. But he didn’t and it looks like it may not be happening any time soon.
So should Davis have partnered with a BE 100 member? Sure ,he should have. As a matter of fact here is a short list of whom I think could have help bolstered his deal in the Grizzlies purchase: • Jesse H. Turner, CEO of Tri State Bank of Memphis. Mr. Turner’s long time commitment to the Memphis area would have been a tremendous asset. Tri State Bank has been in the community since 1946 and that mere presence would have probably help smooth the minds of the Grizzlies’ minority owners.
• Alfred C. Liggett III, CEO of Radio One. Although Radio One doesn’t have any properties in the Tennessee markets, the presence of a minority media entity would have given Davis’ group some savvy marketing strategies that may not be currently present with the Grizzlies.
• James G. Keiser, CEO of Lexus of Memphis. Mr. Kieser would have been a very important asset to Davis’ ownership group. Like Mr. Turner, he is in the Memphis community. With Keiser’s dealership, a major economic model, would have been an integral part of also ensuring that the Grizzlies would remain in Memphis and not be moved.
• Victor B. MacFarlane, Principal partner of MacFarlane Partners. MacFarlane’s presence as maybe Davis’ chief minority partner in the majority group would have definitely been a benefit from a financial end of the deal. Real estate management is one of the more ‘solid’ financial arms right now simply because no more land can be made but also because the spreadsheet would have reflected MacFarlane’s holdings, the NBA would have not had a problem in giving this deal a favorable mark.
These three individuals all would have been able to give the Davis ownership group a good financial foundation that the league would have been looking for.
In the sports business world, perception is a very important attribute to master and because Davis’ BDV Holdings, LLC simply did not have the ‘mustard’ to generate the 15% he would have needed in the $252 purchase price, the deal simply went without a murmur.
Davis’ failure should be a learning lesson for potential black ownership groups in pro sports. If you do not have a solid ownership group that has a sound financial spreadsheet from top to bottom, today’s leagues will not be willing to entrust you with such an expensive venture.
Imagine the kind of ownership group that Davis would have had if he had simply asked MacFarlane, Turner, Liggett and Kieser to be a part of the purchase? Instead of purchasing the majority share from Heisley, this group could have eventually bought out the minority share holdings as well.