Meyer Orbach, the second largest shareholder of the Minnesota Timberwolves, filed a lawsuit Wednesday in U.S. District Court in Minneapolis, alleging that the pending sale of the franchise by owner Glen Taylor to Marc Lore and Alex Rodriguez violates l ‘franchise partnership agreement, according to a copy of the claim obtained by ESPN.
The lawsuit cites Taylor’s failure to honor “flanking rights” for minority franchise investors, which allows them to sell their interests in the teams before Taylor sells his.
A vote from the NBA Board of Governors is still required to give Lore and Rodriguez final approval of the sale.
The lawsuit filed by Orbach, a New Jersey real estate mogul who owns more than 17% of Timberwolves and WNBA Lynx, also includes an important revelation: Despite Taylor’s public statements to the contrary, he did include no provision in the $ 1.5 billion sales agreement. with Lore and Rodriguez forcing the new ownership group to keep the franchise in Minnesota when they take over the team, according to an exhibit in the lawsuit.
In fact, the new details of Taylor’s sale agreement with Lore and Rodriguez – which is expected to be completed by July 1 – include a clause under âGovernance Mattersâ that lists several actions that would require the new owner to â be presented to the Advisory Board for discussion. “- including any project to” relocate the team outside the Twin Cities market “.
According to an attachment to the complaint, the agreement between Taylor and the Lore-Rodriguez group recognizes that “the advisory committee is advisory only … and no action … requires approval in any form whatsoever, by the advisory committee to be effective. “
Essentially, there are no contractual limitations to prevent Lore and Rodriguez from moving the Timberwolves and Lynx to a new town.
The wording of the sale agreement between Taylor and future owners Rodriguez and Lore contrasts with Taylor’s numerous public comments that the sale agreement includes a provision requiring the new group to keep the Timberwolves in Minnesota. “They’ll keep the team here, yeah,” Taylor told the Star Tribune (of Minneapolis) on April 11 of the Lore and Rodriguez ownership group. âWe’re going to include it in the deal. At this point we have a letter of intent, but when we write the contract, we’ll put it in there. That’s okay. It won’t be a problem. problem.”
A few days later, Taylor reiterated on WCCO radio in Minneapolis: “We have it in the contract. They signed the contract to do this …”
Taylor then said this: “But let’s just say they managed to break this deal. The real deal is with the NBA. The NBA will make the decision whether someone is going to move or not move. The NBA will not approve. The Timberwolves move from here to Seattle, it’s in the best interests of the NBA that in Seattle a new team is forming.
âIt’s an economic decision that is in the best interests of all owners, because if they create a new team there, that team will have to pay maybe $ 2 billion to get started. They pay this to other owners. The current owners won’t pay a billion and a half to leave it in Minnesota and an additional $ 2 billion to get it out of there. It is the assurance that I have not to bring him out of there. “
Lore and Rodriguez are expected to buy the team in installments, first becoming limited partners and then increasing their percentage until they assume a controlling stake for the 2023-24 season. The sequencing is expected to include a 20% purchase of the team in 2021, sources said.
Essentially, Orbach’s complaint says the follow-up clause is supposed to be enforced immediately after Lore and Rodriguez’s deal is finalized to buy the team.
According to the complaint, “When Orbit [Orbach’s company] attempted to exercise his tracking rights, Taylor not only ignored Orbit, but also said privately – contrary to his public statements – that he was not proposing to make a “control sale” with Rodriguez and Lore for the moment. Instead, Taylor claims that any “sale of control” will take place in the future, and therefore Orbit currently has no follow-up rights. “
The complaint continues: âTaylor is wrong. Although the deal with Rodriguez and Lore was structured in a clumsy attempt to circumvent Orbit’s tracking rights, it does not deprive Orbit of its tracking rights. … Tracking rights are triggered regardless of whether control is transferred “in a single transaction or in a series of related transactions”, according to the Timberwolves partnership agreement.
Taylor, 80, entered an exclusive 30-day negotiating window on April 10 that expired without a deal, although the parties continued to negotiate in good faith. Taylor previously said a deal was contingent on Lore and Rodriguez keeping the team in Minnesota. The Timberwolves have a lease at Target Center until 2035, though the buyout is $ 50 million – about 1.3% of the $ 1.5 billion purchase price.
It is believed that Lore and Rodriguez need the time to raise the funding necessary to purchase the controlling stake, sources told ESPN. The first payment is due at the close of the transaction, which is expected to take place around July 1.
The Timberwolves have historically been one of the worst performing teams in the league in terms of revenue generation.
From the time Kevin Garnett was traded from Minnesota in the 2007-08 to 2018-19 season – the last full season before the pandemic – the Timberwolves have placed second in worst total attendance, ahead of only the Sacramento Kings, according to ESPN Statistics and Information.
Taylor had long sought this type of arrangement. Other owners, like the late Washington Wizards owner Abe Pollin, did so in the sale to current owner Ted Leonsis and, more recently, when Mikhail Prokhorov sold Joseph Tsai the Brooklyn Nets in two one-to-one deals. year apart.
Taylor bought the Timberwolves in 1994 for $ 88 million, which prevented a franchise move to New Orleans. Taylor has said he will continue to lead the club for two more seasons until a transfer in 2023.
The sale also includes the Iowa Wolves and T-Wolves Gaming of the G League.
Lore and Rodriguez met with Timberwolves staff and toured the team’s facilities in Minneapolis last month.
Brian Windhorst of ESPN contributed to this report.