Shinn seeking local investors

[Decious]

From the Oklahoman

By Berry Tramel
The Oklahoman

Hornets owner George Shinn soon plans to solicit local investors for his NBA franchise that has been a stunning success in its three months in Oklahoma City.

Shinn, who took on a big debt when he bought out partner Ray Wooldridge last year when the franchise was in New Orleans, is seeking limited partners.

He does not want to relinquish control of the team that relocated to Oklahoma City after Hurricane Katrina swamped New Orleans.

"I think it's important, if you're going to have owners, have 'em from the community where you are," Shinn said.

Calls to Oklahoma City business leaders were not returned.

The New Orleans Times-Picayune reported that Shinn took on significant debt to buy out Wooldridge's 35 percent of the team.

Shinn paid Wooldridge at least $67 million, according to the reports, which would place the Hornets' value at approximately $191 million.

In Forbes magazine's 2004 list of NBA franchise values, the Hornets were estimated to be worth $225 million.

The three most recently sold franchises went for much more: the Phoenix Suns for $401 million in 2004; the Cleveland Cavaliers for $375 million in 2005; and the Boston Celtics for $365 million in 2004.

The Charlotte Bobcats became an expansion franchise for $300 million.

Hornets President Paul Mott said it probably is impossible to determine the franchise's worth, since it is in flux.

Shinn and NBA Commissioner David Stern have said the Hornets will return to New Orleans, if possible.

But the Hornets were 30th out of 30 NBA teams in attendance in 2004-05. With the rebuilding of New Orleans moving slowly and the success of the Hornets in Oklahoma City, there is speculation the franchise could remain here permanently.

Shinn said he would commit to buying back the shares of local investors should the Hornets leave Oklahoma City.

Shinn and Mott had begun a similar process in New Orleans but had not entered into any commitments when the storm struck that city.

Mott said the minimum investment level is two percent, which could range anywhere from $4 million to $6 million, depending on the settled value of the franchise.

Mott said the Hornets will present plans to prospective investors beginning in January.

[Jack]

Hmmmm, sounds to me like the Hornets are staying here. Otherwise, he'd be seeking local investors from New Orleans. He wouldn't be seeking local investors from Oklahoma if the Hornets weren't staying here.

[mranderson]

I agree, Jack. And have said from the beginning I felt the Hornets move was permanant.

Shinn did say, however, he would sell back the shares if he moved back to New Orleans. However, most businesses deny rumors, then those rumors turn into fact. Hence one of my favorite expressions. "A rumor is a fact that hasn't happened yet."

Watch SMG have a clause in the contract with New Orleans to transfer the contract to another SMG facility, paving the way for a seemless transition from the New Orleans/Oklahoma City Hornets to the Oklahoma City Hornets. Either that, or Oklahoma City excersises a buyout clause or negotiation. It may not be announced until the end of the 06-07 season, however.

[Patrick]

If the Hornets were only staying for 1-2 seasons, I really doubt Shinn would go to all this trouble. This definitely tells us the Hornets are staying longer than 1 season.

BTW, I've heard from a few season ticket holders that they're already receiving renewal letters for next year. Guess that confirms that they're staying next year.

I think it's time to rip the N off of the mascot, and replace it with an O!

[BDP]

I'm thinking, too, that if the deal was structured with a New Orleans buyout, that it would have to have some sort of set value for the deal to be worth anything. I don't pretend to know the ins and outs of professional sports ownership, but it wouldn't be very attractive to me as a prospective buyer if I knew I might be forced to sell to accommodate a move back to a historically less viable market. It seems to me that the move would inherently force the value of my shares downward at the very time I was being forced to sell, unless I was guaranteed a set price, one which assured a gain. And if that was the case, why would Shinn do this, unless he was in dire need of some short term capital?

These things are often leaked to generate interest and drive the price up, and also to see what kind of interest they can get. Given the uncertainty of the teams long term locale, you'd think any prospective OKC buyer would either ask for a discounted price, a guaranteed buyout amount, and/or assurance that the team would stay in the better market. None of these sound good for Shinn, unless he is really prepared to keep the team in OKC. Just my opinion.

This may very well simply be another step in evaluating OKC's viability.

[writerranger]

Don't the team owners have to approve any move? The commissioner? I know Stern is a booster of OKC, but he's made a lot of promises to NOLA. It's not all up to Shinn, is it? I may be wrong. By the way, I don't think he's truly "seeking" investors - I think he knows exactly who they are right now. This sure looks interesting!

[BDP]

By the way, I don't think he's truly "seeking" investors - I think he knows exactly who they are right now.

I agree. He probably knows who the principle interests would be, but he could also be trying to motivate smaller minority interests that, together, may enable him to ask a higher price of any potential investors.

[Midtowner]

This would not be public knowledge unless Shinn wanted to send a signal to NO -- they had either pony up some $ or expect to have a nice arena with no team.

[HOT ROD]

Awesome news.

Just as I had predicted, OKC has so much potential that its funny how now everyone is beginning to see the light.

I am so happy for OKC and do hope that permanent status will be achieved and we can drom the NO from the Oklahoma City Hornets!

[Patrick]

I've been told that the typical partners, the Mathis Brothers, Gaylords, Devon Energy, Chespeake, and even Bob Funk have an interest in buying a part of the team. Don't be surprised if you see the current supporting corporations buy out Shinn, or at least buy a big chunk of the team. Those companies want the team here for quality of life issues. It's easier for them to recruit good employees with an NBA team in town to use as a quality of life issue.

[Patrick]

One thing you have to remember is that deals like this are usually done before they're ever announced to the public. I doubt Shinn would've announced this unless he already had some potential buyers lined up. I wouldn't be surprised if the 5 sponsoring companies are offering to buy a big chunk of the team. Those companies want the team here for quality of life issues. It's easier for them to recruit good employees with an NBA team in town to use as a quality of life issue.

I have a feeling this is a PR stunt. Shinn already has the buyers, and he's just trying to give NO one last chance to see if anyone will step up to the plate and show their support for the team. If no one from NO steps up the plate, and he has local investorsd here, he's probably going to use that as firepower to keep the team here.

[Midtowner]

A few of my classmates have friends that work in the Hornets organization. They've been told to go ahead and buy houses here in OKC by their superiors.

That's a pretty clear signal as well if you asked me.

[Doug Loudenback]

A few of my classmates have friends that work in the Hornets organization. They've been told to go ahead and buy houses here in OKC by their superiors.

That's a pretty clear signal as well if you asked me.

Midtowner, I'm sure that people at HornetsCentral.com would be interested in this ... I often double post at both sites (here and there), if I deem it "worthy". This would be a good thread to start with there since it relates to your point: http://www.okchornetscentral.com/for...opic.php?t=509 which is similar to this one though it's a bit more active there, given the specific nature of that forum.

I'd quote you there, but I decided to leave that to you.

[Midtowner]

Doug -- I doubt they'd be interested. Also, the reliability of the information is questionable. As you probably know, 2nd and 3rd hand information from fellow 1L's is not always the most reliable stuff in the world. Interesting, but unreliable.

[Doug Loudenback]

Doug -- I doubt they'd be interested. Also, the reliability of the information is questionable. As you probably know, 2nd and 3rd hand information from fellow 1L's is not always the most reliable stuff in the world. Interesting, but unreliable.

Sure they would be ... every bit as the people who hang around here ... unless you are saying that you'd prefer to post "unreliable" information here only, and not there?

[Midtowner]

Doug, feel free to post it as long as you qualify it with "This is something I heard on a message board from someone who heard it from someone else".

See how warm your response will be.

[Doug Loudenback]

Doug, feel free to post it as long as you qualify it with "This is something I heard on a message board from someone who heard it from someone else".

See how warm your response will be.

Well, actually, I'd prefer to make a link to your original post here but I'll add whatever qualifications you'd like. It would simply EVERYTHING, of course, if you'd just post THERE instead of me ... but ... OK OK!