Thursday, August 23, 2012

Good News in Griz Land: Pera and Locals Get Together

Posted By on Thu, Aug 23, 2012 at 12:33 PM

It happened.

In my post yesterday morning about potential endgames in Robert Pera's bid to purchase the Grizzlies, I wrote that a partnership between Pera and local investors, if paired with contract language that further strengthened the city's grip on the team, would be the best-case scenario for which fans should hope. I also wrote that if Pera were willing to add that kind of contract language that he would likely find locals willing to buy in. It's a scenario I proposed days after Pera's name first emerged, when he was being presented as a solo buyer who would acquire the small remaining percentage of the team still owned by locals in addition to Michael Heisley's majority stake. At the time, it was merely a personal daydream scenario — the way I thought things could play out in a perfect world, not necessarily the way things would play out. But now it's on the verge of being real.

Kyle Veazey and Geoff Calkins reported in the Commercial Appeal last night that Pera has reached agreement with a local group led by current minority owners Pitt Hyde and Staley Cates, and including new local investors, to join his purchase bid, with roughly a third of the franchise's ownership going to the local investors — approximately the same ownership stake that locals had with Heisley before their shares were diluted down to around two percent.

In order the make this happen, the deal includes multiple provisions — in place for the next 15 years — that strengthen the local grip on the team, including reinstating the right-of-first-refusal option that locals once had with Heisley.

This is great news for Memphis. As I outlined yesterday, such a deal has the potential to further stabilize the franchise, repair the frayed relationship between the franchise and the local business community, and do so without sucking up too much free money that can be put to arguably more important civic and philanthropic uses.

The best part of this is how apparently non-contentious it was to negotiate. The relationship between Michael Heisley and the locals was testy from the beginning, with Heisley monetizing the naming rights on FedExForum in a manner that negatively impacted the franchise's long-term value and with locals buying a lower percentage of the team than Heisley expected.

The relationship between Pera and the locals seems to be starting on much more solid ground, and the 30%-35% buy-in by the new local group should only be the beginning of a renewed commitment to the team from the business community.

This major hurdle opens up a new arena of questions, of course, ones that we'll be dealing with in the days and weeks to come. Among them:

Who else — both local and non-local — might emerge as part of the overall ownership group beyond Pera and the five named locals?

Assuming that bringing known-quality locals on-board at such a significant level makes the Pera bid likely to go through — and I'm making that assumption — when will the NBA move to approve the sale?

What, if any, changes will be made in regard to the team's management structure, both on the business and basketball side?

What kind of owner will Pera be, in terms of financial backing, management style, and the strategic direction he sets?

Those questions are a start. One I want to address in a brief and entirely speculative way immediately is the question of management changes. I think it's reasonable to expect any new owner to put his imprint on a team's decision-making structure, either immediately or gradually. But given that Pera would presumably take over the team with a large stake of local owners familiar and — as far as I can tell — largely comfortable with the current regime and coming off the two best seasons in franchise history, I would be surprised to see any kind of instant, dramatic changes. I can't imagine, for instance, Lionel Hollins going anywhere. And I would be very surprised if Chris Wallace isn't retained after the sale.

That said, the two figures who have been identified as Pera representatives each have experience in high-level management positions on the business (David Carlock) and basketball (Jason Levien) sides of NBA teams. Without any specific information about Pera's plans, common sense would suggest that if people with that kind of experience help Pera obtain the team they would be likely to have roles in the team's management. For an example, you can look at the role of former Grizzlies general manager Dick Versace, who was involved with Heisley's purchase of the then Vancouver Grizzlies and moved into the front office after the purchase, remaining with the team even after the hire of Jerry West.

The Grizzlies' current high-level basketball operations staff is fairly thin — Chris Wallace (Vice President of Basketball Operations and General Manager), Kenny Williamson (Assistant General Manager), Tony Barone Sr. (Player Personnel Director), and Tony Barone Jr. (Scouting Director) are the primary players. While it's easy to envision a new owner prompting some turnover among this staff, it's also pretty easy to envision new figures added to what is already in place.

Either way, I would be very surprised if there aren't significant new faces involved in the team's management structure at some point after an ownership change, but I would be equally surprised to see some kind of dramatic upheaval. Time will tell.

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