The Grizzlies were going to get a new owner, Robert Pera. He was going to bring new life to a franchise in a city that has had a... complicated relationship with current owner Michael Heisley. Heisley has made it clear he wants out for years, and in June, it was announced there was an agreement to sell the team to Pera. Pera, a tech billionaire, would bring a bold new vision.
And it looks like none of that is going to happen.
Pera is facing major complications in the sale on two fronts which present substantially bigger problems for him than just not getting his toy basketball team. Stock in Pera's Ubiquiti Networks, which he has a 60 percent stake in, has plummeted, and Pera's own worth has gone down with it. Just days before the sale was announced, Pera's personal worth fell from the billionaire ranks to $980 million according to Forbes. By the end of the month, the Wall Street Journal reported his stock value at $800 million.
So that's not good.
Now there's this from Sports Business Journal via the Sporting News:
The stock drop has caused people to question whether Pera, 34, can afford the team, as the NBA investigates his personal and business background as well as his financial status.
“I think in the long run we'll be OK,” Pera said about his San Jose company's struggles on Wall Street. “I think we're looking at some short-term irritation, and it's irrelevant to our long-term goals.”
"I think we'll be OK."
Confidence in this deal working out has never been higher!
But if you want the real concern, it's this, from the Sporting News:
The NBA is going through an extensive vetting process that will look into everything from Pera's business associates, to his family, to his financial situation. That will include Ubiquiti's recent controversies, such as an acknowledgement that the company's products were illegally sold into Iran.
Ubiquiti makes a variety of wireless equipment, such as antenna systems for broadband Internet, and sells primarily into developing and emerging markets. It has recently expanded its product line to include items such as surveillance video systems and systems to control lighting and electricity being used in office buildings.
NBA officials will “look into (the Iran issue), they'll question it,” said SportsCorp. President Marc Ganis, who advises on team deals. “They don't want a front-page New York Times story six months from now about how an ‘NBA owner sold products to terrorist organizations,' by way of example. They're going to want to understand what (the Iran case is) before they sign off on it.”
Oh, that's not good. That's not good at all.
Pera provided the Journal with the following quote regarding the Iran controversy, to put people's minds at ease.
“We already have full disclosure with the government,” Pera said. “They worked with us to put procedures in place (to prevent it from happening again) and issued a warning letter. So in our eyes, it's a concluded, closed matter.”
Well, that's good to know. But the NBA's not going to evaluate it from a legal perspective, they're going to evaluate it from a PR damage perspective and that could seriously hurt Pera's bid. Not for anything, but the NBA doesn't really need any more owners with image problems, even if the problems were an oversight they've put behind them. (The SBJ actually has more issues facing Ubiquiti, check out the link for the full rub.)
It's possible everything rebounds, or at least sorts itself out, and the deal goes through. But as it stands, the NBA could be facing its second new ownership deal that falls apart inside of a year, after Alex Meruelo backed out of a deal for the Hawks in November.
It's a complicated situation, as tends to happen with billionaires, but there's cleary a lot to figure out before the Grizzlies come under new ownership.