Phil Knight Makes An Offer To Buy The Portland Trail Blazers
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Paul Allen co-founded Microsoft with his childhood friend Bill Gates in 1975. That ended up making him one of the world’s richest people with a net worth of more than $20 billion, and it afforded him the ability to tackle his other passion — sports.
Allen purchased the NBA’s Portland Trail Blazers in 1988 for $70 million. He then acquired the NFL’s Seattle Seahawks nine years later for $200 million. And he also owns the Seattle Sounders FC, a Major League Soccer team that began play in 2009.
But after a decade-long battle with Non-Hodgkin Lymphoma, Allen passed away in 2018 at the age of 65 and left behind all of his sports assets in a trust with his family.
So as you can expect, with professional sports teams not often going up for sale, speculation has run wild over the last several years about what might happen next.
And now we might have some movement, with Adrian Wojnarowski and others reporting that Nike founder Phil Knight and Dodgers co-owner Alan Smolinisky have made a $2 billion-plus written offer to purchase the NBA’s Portland Trail Blazers.
But the Portland Trail Blazers released a statement shortly after the report and kept it simple, “An offer was made by Phil Knight. The team remains not for sale.”
The team might say they are not for sale, but it’s clear that not everyone believes them.
For example, Portland-based writer and talk-show host John Canzano wrote a substack post last week that claims Paul Allen directed the trust “be liquidated upon his death” and that we should expect a sale of the NBA team in the “next 6-18 months.”
“Those familiar with the details of the Paul G. Allen Trust tell me there isn’t a lot of wiggle room for trustee, Jody Allen. The trust was established in 1993 and includes billions in assets, including the NBA’s Trail Blazers and NFL’s Seattle Seahawks.
“Paul directed that the trust be liquidated upon his death and the assets used to fund his passion projects,” a source said. “None of this is up in the air. The instructions are clear: The sports franchises and everything in the trust must be sold.”
Allen died in October 2018. His luxury yachts and some real estate holdings have already been liquidated. But the fate of his NBA and NFL franchises still hang in the balance. Insiders expect the Blazers to be positioned for auction in the next 6-18 months. The Seahawks could follow shortly after, but sources say Jody Allen may be wrangling to keep a piece of the NFL franchise.”
And once you add in the fact that NBA commissioner Adam Silver said, “At some point, the team will be sold. I don’t have any sense of the precise timing,” when asked about it last night, I think it’s pretty apparent the franchise will be sold at some point.
But the more interesting part is that this new report appears to directly contradict Phil Knight’s ownership stance from more than a decade ago. Because when Dwight Jaynes asked him about his interest in the team, he was pretty straightforward:
Are you interested in owning a professional sports team like the Blazers? "No, I don't think so. I'll say this: the Portland Trail Blazers have a terrific owner. Paul Allen is a really good owner.”
What if they came up for sale? "I don't think so. Not at my age. I think he does a great job and I'm hopeful he'll be there for a long time."
Paul Allen is no longer running the team, of course, and time can certainly change things, but Phil Knight was 73 years old when he made that statement and is now 84.
So if we think the team will eventually be sold, which most people seem to agree on, and if Phil Knight was to lead an ownership group, which certainly makes sense given his personal and professional ties to the state of Oregon, the real question becomes — what is the price? That’s the part that might be more difficult to figure out.
Because Phil Knight and Alan Smolinisky have reportedly offered a little more than $2 billion for the team, while Blazers vice-chair Bert Kolde is apparently looking to set a price target of $3 billion or more (roughly $1 billion or more than the current offer).
Phil Knight’s Impact On Oregon
$1 billion-plus in donations to the University of Oregon
Nike employs more than 8,000 people at its Oregon headquarters
Nike accounts for about $2 billion in economic impact for the state of Oregon
And while $3 billion might seem like an outrageous number for the Portland Trail Blazers—they currently do about $200 million in annual revenue and $20 million in annual operating income—I actually don’t think it’s that far off from reality.
According to Forbes, the average NBA franchise is worth nearly $2.5 billion. That’s a 13% jump from 2020 to 2021, and the average value of an NBA team has grown +1,098% from $207 million in 2001 to $2.48 billion in 2021 — that’s a 13.22% CAGR.
But here’s the craziest part — not only are sports organizations like Chelsea FC and the Denver Broncos pushing $5 billion-plus valuations, but the general consensus is that NBA valuations will pop in 2025 when the league re-ups its current TV deal.
For example, teams currently receive over $80 million annually from the NBA’s current deal with ESPN and Turner Sports. But with the league seeking a new deal worth $75 billion, or an annual rate of $8 billion, that would mean that NBA teams could receive upwards of $275 million or $300 million annually from TV deals alone.
That would certainly make teams more valuable. But don’t trust my word on it; just look at what happened to valuations after the $24 billion TV deal was signed in 2014.
So we’ll see what happens. There are only 30 teams, and with the NBA now allowing private equity firms to own minority equity stakes, a dynamic has been created where a fixed supply asset has an increase in demand. That will only drive prices higher.
I hope everyone has a great weekend. I’ll talk to you Monday.
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