MJ in the middle of NBA billionaire battle
Gamestop comes to the NBA
Hedge funds are losing so many billions because of efforts by retail investors, that there are concerns about the stability of the broader stock market. It’s a story of investors inspired by a Reddit message board taking on a hedge fund manager named Gabe Plotkin. Maybe it seems like it has nothing to do with the NBA.
But as Tom Haberstroh explains in his first TrueHoop story, it has everything to do with the NBA. The position of the retail investors has been most vocally egged on by Warriors investor Chamath Palihapitiya and Mavericks billionaire Mark Cuban.
Feeling the pain of it all: Michael Jordan’s Charlotte Hornets.
Plotkin is seen as the “golden boy” of the hedge fund industry, according to one source. Palihapitiya calls Plotkin a “titan of our era.”
Michael Jordan has had almost total control of the Hornets since he purchased a reported 97 percent of the team in 2010. But in 2019, he made an exception, and welcomed in two hand-selected, deep-pocketed outside investors from the hedge fund world: Gabe Plotkin of Melvin Capital and Daniel Sundheim of D1 Capital.
Their recent losses have been, in the words of one hedge fund source, “catastrophic.”
Before this episode, there had been chatter that Plotkin or Sundheim could become the next Ryan Smith—the 42-year-old, Utah-based tech giant who bought his favorite team, the Utah Jazz, for $1.66 billion about a month ago. A common reason to purchase a stake in an NBA team is to get on a “path to control”—to be first in line to one day take over. Jordan himself walked that path to become the owner of then-Bobcats, now Hornets.
Forbes pegs the Hornets’ current valuation at $1.5 billion. If Jordan had visions of eventually selling to Plotkin or Sundheim outright … can they still afford to take over? That’s one of many questions raised by TrueHoop sources in the hedge fund business:
2020 was a historically bad year for NBA finances, thanks to the pandemic shutdown, absent ticket revenue, and a hit to the NBA’s China business. If cash is tight, can Jordan still count on Plotkin or Sundheim?
Will Plotkin or Sundheim be liquidating assets in the fallout of the GameStop episode? Could that include their stakes in the Hornets? (One potential buyer is legendary hedge fund manager David Tepper, who bought the Carolina Panthers at an NFL-record price. In 2019, he brought the MLS to Charlotte reportedly for a cool $300 million.)
And … did Jordan invest his own money with Melvin Capital or D1 Capital?
Subscribe to read the whole story.