Earlier today, the Atlanta Journal-Constitution reported that Los Angeles businessman Alex Meruelo has agreed to purchase a majority ownership stake in the Atlanta Hawks. If the deal is approved by the NBA’s Board of Governors, Meruelo will become the first Hispanic primary owner of an NBA franchise. That’s pretty cool.
Meruelo built up his empire starting with a pizza restuarant, La Pizza Loca, that he opened in L.A. at the age of 21. His pizzeria grew into a chain of 50 restaurants in Southern California and his Meruelo Group also owns construction firms, the Grand Sierra Resort and Casino in Reno and a Spanish language TV station in L.A. He’s your classic American success story and now he wants “to bring a championship to the city of Atlanta.”
What I find particularly interesting about this deal are the numbers involved. In 2004, the Atlanta Spirit Group purchased the Hawks and Phillips Arena for a reported $208 million. Seven years later, they sold the team and the arena to Meruelo for a figure in excess of $300 million, according to David Aldridge. Meruelo will also assume the group’s Phillips Arena debt, which Tom Ziller estimates to be in the range of $120 million.
Since Atlanta Spirit Group will retain minority ownership and when you add the debt to the purchase price, that’s a nice little profit the group was able to make in a seven-year period. Who said owning an NBA team is bad business?
As we all know, that’s exactly what the owners are claiming in this spirit-crushing lockout we’re enduring. And it leads me to once again ask the question I’ve been asking ever since these lockouts started becoming commonplace in professional sports: Should we feel sympathy towards billionaire owners for incurring minor losses while running these teams, when they can usually make a significant profit if and when they sell the team?
I’m not taking sides in this NBA labor dispute — both sides are stubborn, greedy and clearly don’t have the best interests of the sport and its fans at the top of their lists of priorities. But if there’s anything more tiresome than millionaire athletes whining about their ability to feed their families, it’s billionaire owners who front like their financial losses related to sports team ownership are crippling. There doesn’t appear to be a shortage of presumably savvy, mega-rich businesspeople out there who are more than happy to enter into this supposedly shitty business.