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Michael Jordan’s ownership of the Charlotte Hornets has proven to be one of the most lucrative sports business deals in history.
From acquiring the team for a nominal sum in 2010 to the recent sale at a staggering $3 billion valuation, Jordan’s financial gains with the Hornets have surpassed even his earnings from a four-decade-long association with Nike.
The team is selling for $3 billion, with Jordan making a profit of over $2 billion. That will surpasses his earnings from Nike over the past 40 years, which is $1.8 billion.
A report from Joe Pompliano of The Joe Pomp Show delves into the details of this remarkable story, highlighting the challenges faced by the franchise under Jordan’s ownership, the reasons behind its soaring value, and the significance of this deal in the sports industry.
Background:
The Charlotte Hornets, formerly known as the Charlotte Bobcats, entered the NBA as an expansion team in 2004 under the ownership of Robert Johnson, the first Black billionaire in American history.
However, the team faced numerous struggles, including financial losses and an unsuccessful attempt at launching a regional sports network. Seeking a turnaround, Johnson brought Michael Jordan on board in 2006, granting him complete control over basketball decisions in exchange of buying a small minority stake.
Jordan’s Initial Challenges:
Despite the high expectations surrounding Jordan’s involvement, the Charlotte franchise faced an arduous journey. The team struggled to achieve success on the court, failing to make the playoffs or achieve a winning record from 2005 to 2009. Surprisingly, the team’s attendance also declined during this period, creating additional concerns for the franchise.
Johnson’s Financial Pressures and Jordan’s Acquisition:
Robert Johnson, dealing with financial setbacks from other business ventures and an expensive divorce, found himself in dire need of capital. With the team mired in debt and interest payments looming, Johnson made the decision to sell the Charlotte Hornets.
While the headline sale price was reported as $275 million, it was later revealed that Jordan only paid $25 million in cash, with a significant portion of the valuation comprising existing debt on the franchise.
Jordan’s Ownership Tenure:
Despite limited success on the court, Jordan’s ownership tenure proved to be a lucrative investment due to the exponential growth in media rights. While the Charlotte Hornets failed to win a playoff series or finish higher than 6th in the Eastern Conference, the skyrocketing value of NBA franchises became the key driver of Jordan’s financial gains.
The Monumental $3 Billion Sale:
The recent sale of the Charlotte Hornets for $3 billion marked a watershed moment for Jordan’s ownership.
The valuation represented a doubling of the $1.5 billion value achieved when Jordan sold a 20% stake in the team in 2020 and a 70% increase from Forbes’ $1.77 billion valuation just nine months prior.
The $3 billion price tag also resulted in an 11x revenue multiple, surpassing average valuations for NFL, NBA, and MLS teams.
The sale ranks as the seventh most expensive sports transaction in history.
Conclusion:
While critics may point to the lack of success on the court during Jordan’s ownership of the Charlotte Hornets, the $3 billion sale is a testament to his acumen as a businessman, as he’ll personally make more than $2 billion on the deal.
Jordan’s astute investment in the team has generated a substantial windfall, potentially surpassing the earnings he amassed from his iconic partnership with Nike.
The Charlotte Hornets sale serves as a testament to the soaring values of professional sports franchises and solidifies Michael Jordan’s legacy as a shrewd sports entrepreneur.