Selling a sports franchise is a fairly predictable process. The owner dies or is unable to hand over the team to his family. He runs out of money, turns to other activities or is pushed out due to bad behavior.
Once the decision is made, everything is relatively public. Bankers are hired, potential buyers come forward, there are auctions and the newspapers write about it for weeks and months.
It was therefore a complete surprise last month when the families who control the Las Vegas Sands casinos announced the purchase of a majority stake in the Dallas Mavericks. No one saw this event coming, but it must be said that the seller, Mark Cuban, has always managed the Mavericks in an unconventional way.
Yet, two weeks later, the fundamental question – why? – remains unanswered. The talkative Cuban, who always seems to be having more fun than any other owner, declined to speak for this article. The Adelson and Dumont families, keen not to preempt NBA approval – which includes due diligence and a vote by other owners – stuck to a statement expressing their enthusiasm.
Regardless, this transaction opens a window on the rapid evolution of professional sport as an economic sector.
When Mr. Cuban bought the Mavericks in 2000 — with money made selling Broadcast.com just before the dot-com bubble burst — sports franchises were still just that: sports teams.
Today, professional sports franchises are the anchor of much larger businesses. They occupy arenas that are part of vast entertainment complexes, such as in Sacramento. They generate content for regional media conglomerates, such as in Washington. They are the lure of millions of fans newly authorized to bet on sports, like in Phoenix.
Mr. Cuban wears many hats: internet billionaire, pharmaceutical entrepreneur who wants to reduce drug prices (with Cost Plus Drugs) and, for one more season, one of the investors in the show Shark Tank (In the Eye of the American dragon). But being a real estate mogul is missing from his picture, which could explain the sale.
The Mavericks own the American Airlines Center, which they share with the NHL’s Dallas Stars in the Victory Park neighborhood on the city’s north side. When Stars owners purchased land near the arena, Mr. Cuban was upset, since their development will reduce parking spaces for fans. Today, he is changing course.
“Cuban probably wants to imitate what is done elsewhere, to be a controlling shareholder [of his arena] – which he is not at Victory Park – and to integrate a casino and a hotel complex,” believes Robert Sroka, professor of sports administration at Georgia State University and sports facility development consultant.
Last year, Mr. Cuban revealed to the Dallas Morning News his plans to partner with Sands to build a new arena, casino and “a huge hotel complex in the city of Dallas.”
Owning a share of such a complex would pay far more to Mr. Cuban than the ticket sales and concessions at the current arena. But there’s one big hurdle (besides financing the land purchase at current rates and getting building permits): almost all gambling is illegal in Texas, and there’s no sign that’s going to change.
A bill to legalize sports betting passed the Texas House of Representatives this year, but Lt. Gov. Dan Patrick blocked it from being sent to the Senate. Even if the Senate were to ratify this bill, the people of Texas would have to vote.
A bill authorizing casinos, even more fiercely denounced by influential religious conservatives, was never adopted by the House of Representatives. Legalizing sports betting would be lucrative for the teams, but it’s the legalization of casinos that Mr. Cuban absolutely needs to realize his plans for a sports and gaming destination. Sands, which has casinos in Macau and Singapore, but none in United States, has hired dozens of lobbyists to pass such a law in recent years.
Mr. Cuban owns about three-quarters of the Mavericks; the rest belongs to a handful of minority shareholders. After the sale, he will own about a quarter and the Adelson and Dumont families nearly three-quarters, with the remaining fraction divided among a few small shareholders, according to two people familiar with the deal speaking on condition of anonymity.
The sale to the Adelsons and Dumonts includes an unusual clause: Mr. Cuban will continue to run basketball operations.
Patrick Dumont, son-in-law of Miriam Adelson and the late Sheldon Adelson, will serve as team governor and vote on league issues. But on the sporting side, it is Cuban who will call the shots.
So Cuban seems to be betting that he will make billions from a team he paid $285 million for in 2000 and that he will retain the ownership duties he values most. In short, if the influence and money of the Adelsons and Sands allows for a new arena and casino, his quarter of the team could one day be worth as much as the three quarters he previously owned.
For Mr. Cuban, the sale could also cushion the expected decline in local TV revenues. The holder of these rights, Diamond Sports Groups, declared bankruptcy.
“I think a new arena, real estate area and hopefully a casino can replace what we’re losing in broadcast and fund the current and future Mavs,” Mr. Cuban told a local TV station by email. Dallas last month.
1,700 kilometers to the west, in Las Vegas, the transaction shakes up the race to obtain an NBA franchise. The Adelson family was the favorite, but they chose Dallas.
Officially, there is no guarantee that Las Vegas will have its team, but the NBA is expected to expand from 30 to 32 teams soon. Last summer, commissioner Adam Silver said the league would study possible expansion in 2024, after reaching new media deals. Adding teams hasn’t been decided, but if so, Las Vegas and Seattle would be considered, he said.