On Friday, Forbes' Mike Ozanian reported that the highest offer "so far" for the Atlanta Hawks and operating rights to Phillips arena is $800 million. This does not include the debt on the arena.
Although Bloomberg reported the offers were around $900 million, a source with knowledge of the bids said that is not accurate. The source, who traded candor for anonymity, said the $900 million figure includes $112 million of bonds remaining on the original $131 million used to finance the construction of the arena.
Highest Offer For Atlanta Hawks Currently $800 Million - Forbes
Last month, Forbes valued the Hawks and operating rights to Philips Arena at $825 million, 22nd out of the league’s 30 teams. On January 30th, Mike Ozanian, and a lawyer representing the Hawks, Chuck Baker, discussed the sale price potentially reaching $1 billion. I'm not sure how the team can be valued at two significantly different numbers in the same month, but they were. It appears the first published number, $825 million, is closer to reality.
The Hawks make money, in part, from operating the arena. That is likely keeping the franchise price as high as it is. Spun off, it's hard to imagine the team fetching too much more than the NBA's buyback price of the Milwaukee Bucks, $575 million. The current value of the Bucks, for comparison, is $600 million, 30th in Forbes' rankings. The Bucks do not have a modern arena. Both have something in common, neither will realize their free market value because the NBA controls the possibility to relocate.
The numbers thrown around for an expansion franchise for Seattle have been in the $1-1.2 billion dollar range. For comparison, Forbes ranked the San Antonio Spurs #11, at $1 billion.
The hypothetical comparison between expansion and relocation of the Hawks looks to be $200 million. If new Hawks owners were to break the lease, as was a previous custom, and relocated to Seattle there would be an additional $75 million in penalties to Atlanta for leaving early and a $125 to $175 million relocation fee. So, it would be about $200 million less, hypothetically, between expansion and relocating the Hawks, once you remove the value of operating of Philips Arena.
The open discussion of how high the bids are for the Hawks smacks of desperation. Nobody wants to leave $200 million dollars of profit on the table. But that's what could happen if the bids do not increase, and it's even more by denying the franchise the possibility of relocation.
Pretty incredible how much value franchise owners place on keeping other people's teams where they are, now.