Ding, dong the Atlanta Spirit is dead. Or is it?
Multiple media outlets are reporting that a majority ownership stake in the Atlanta Hawks along with the operating rights of Philips Arena are about to be sold to California businessman Alex Meruelo. Certain members of the Atlanta Spirit, LLC – the former owners of the Atlanta Thrashers – will remain on in a minority capacity.
It is widely expected that one of the Spirit partners remaining on in a minority capacity is Atlanta-native Michael Gearon, Jr., who reiterated that he had little interest in selling his stake of the Hawks in a tearful May 31 press conference when the Thrashers were officially sold to an entity in Winnipeg.
However, Gearon’s role in running the day-to-day operations of Atlanta’s basketball franchise will be severely curtailed. Meruelo will reportedly be in complete control of Atlanta’s basketball team, which will remain in the United States’ eighth largest television market.
The Hawks released a vague letter to fans late Sunday, which basically verified the reports and stated that completion of the sale was subject to the approval of the NBA’s Board of Governors later this year. If approved by the governors, Meruelo will become the first Hispanic-American to have a majority stake in a NBA team.
The Hawks have scheduled a 2 p.m. press conference on Monday to reportedly announce the transaction.
A sale of Atlanta’s basketball team comes as a bit of a surprise and goes against the grain of conventional wisdom. With the NBA in lockout-mode, there’s uncertainty over how the economics of basketball will emerge post-lockout. Most owners who may be interested in selling their clubs are not actively shopping them at this time.
But the dysfunctional entity known as Atlanta Spirit has never really followed conventional wisdom.
The group that effectively snuffed the Thrashers out of existence in Atlanta has been a model of ineptitude in their seven-year reign over two of Atlanta’s then-four major professional sports teams.
Shortly after taking control of the Hawks, Thrashers and the operating rights to Philips Arena back in 2004, the infighting began. Rogue partner Steve Belkin objected to the club’s acquisition of Joe Johnson in a sign-and-trade deal with the Phoenix Suns. He refused to go along with the deal as the club’s representative to the NBA’s Board of Governors.
Lawsuits started piling up faster than Hawks wins and Thrashers losses, ultimately leading to a messy partnership split, which despite assurances to the contrary, remains active in a Montgomery County (Md.) Superior court although some of the parties claim they have reached a settlement.
The messy disputes, which had more twists and turns than a Stephen King novel, limited the ability of the allegedly cash-strapped Spirit to move forward with the disposition of the company’s assets.
The remaining Spirit members also brought suit against King & Spalding, the attorneys that represented them in the Maryland litigation. That suit remains in the discovery phase. Depositions of NBA and NHL officials, along with business brokers and lawfirms involved in the complex litigation were scheduled for July.
The crux of the Spirit’s claim is that they were unable to sell the Thrashers because King & Spalding botched the Maryland litigation, which made it impossible for the Spirit to dispose of the Thrashers, Atlanta’s former hockey team that was thought by many of its fans as the red headed step child of the Spirits’ operations.
While the Spirit locked up many of its Hawks players like Johnson, Al Horford and Josh Smith to long term contracts, the group proved utterly inept or unwilling to keep any of their Thrashers stars. Franchise faces Dany Heatley and Ilya Kolvalchuk bolted town along with star player Marian Hossa, who was acquired in a trade for Heatley.
Languished near the bottom of the league in payroll and attendance for almost the entirety of the Spirit’s tender, the Thrahsers struggled in the standings, making just one playoff appearance during the group’s reign.
Allegedly sick of losing money on the Thrashers, the Spirit sold the team to True North Sports and Entertainment, Ltd., ending the NHL’s second try to bring hockey to a metropolitan area of 5.6 million people despite incurring similar losses operating the Hawks.
Contrary to media reports, True North paid $110 million for the Thrashers. They forked over an additional $60 million to the league to move the team to Winnipeg. The Spirit may or may not have received $20 million of that relocation fee.
The Thrashers became the first hockey team to leave their home market since the Hartford Whalers moved to North Carolina to become the Carolina Hurricanes to begin the 1997-98 season.