Memphis blues: Where do Grizz go from here?
MEMPHIS, Tenn. -- The NBA delivered its tersely worded statement late Tuesday, casting further doubt on the chances that the sale of the Memphis Grizzlies from Michael Heisley to a group led by former Duke teammates Brian Davis and Christian Laettner would go through. The language was curt and almost threatening: "Based on the limited information that we have received, it appears that certain elements of the transaction would not comply with NBA rules."
Is this deal dead? What does the future hold for Jerry West, Mike Fratello and Pau Gasol?
ESPN.com went to Memphis to investigate the many facets of the proposed sale and to get a closer look at Davis, the not so deep-pocketed 36-year-old trying to pull off this deal.
The 99 percent solution
"What are the chances this thing is going to go through?" Brian Davis was asked last weekend in Memphis at an office inside a converted cotton warehouse, the type of old, sturdy, exposed-brick building that sends Davis' pulse racing.
It's a building somewhat similar to the old tobacco warehouse in Durham, N.C., that the 36-year-old Davis converted into loft apartments. That was a little more than a decade ago, when Davis would bring investors down to the complex itself to let them touch what they would be buying -- a literal hands-on strategy that helped Davis become a millionaire, building a small fortune that's a lot of money by casual standards but a pittance compared to the net worth of the heavy hitters whose ranks he is trying to join.
Taking advantage of a change in NBA ownership rules, Davis is trying to buy the Memphis Grizzlies by putting up between $31 million and $39 million of his own money -- a far smaller amount than what has previously been reported. He insists his bid will withstand the scrutiny of the NBA, which hasn't yet seen it, and he's confident his big-moneyed silent partners -- their identities still a mystery, even to the NBA -- will pass muster, too.
"It's 100 percent. The money is there," he said.
"One hundred percent? Really? You're that certain?" ESPN.com asked.
"OK, 99 percent," Davis hedged, "because you never know with David [Stern]."
Tick, tick, tick
A former Duke guard and a veteran of 68 NBA games with the Timberwolves in 1993-94 (he averaged 1.9 points and knocked down one career 3-pointer in three attempts), Davis has a closing deadline of Jan. 15 in his bid to gain control of Heisley's 70 percent share of the franchise.
The minority owners who control the remaining 30 percent have already passed on their option to match the Davis offer, saying they were willing to move forward despite Davis' failure to identify his fellow investors as they said he told them he would. In other words, the guys Davis is going to have to work with -- including local magnate Pitt Hyde of AutoZone fame -- are already somewhat ticked off at him for being slow to provide the information he promised.
They are among the many skeptics waiting to see whether the NBA will sign off on the financial particulars of a deal Davis has been trying to put together for nearly a year, leaving the franchise -- and especially its three biggest principles, president Jerry West, coach Mike Fratello and star forward Pau Gasol -- in a frustrating state of limbo.
Memphis has the NBA's worst record, 4-13, and there's nothing anybody can do to shake things up on the basketball side until the sale either does or doesn't go through.
"We've been told we can't do anything," Fratello said. "Nobody knows for sure what's going to happen with anybody because what if the sale doesn't go through? Then the team is still Mr. Heisley's."
Davis has been scrambling against the clock to turn assets into cash while also securing commitments from partners who will provide the bulk of the money. Outside of Davis' inner circle, the identities of those investors still are not known to anyone, including the attorneys and accountants inside the NBA office in New York who will ultimately review the financial strength and viability of the Davis bid.
"I'm submitting it in a week," Davis said.
"A week or two," corrected his attorney, Michael Sorrell, who helped handle the sale of the Dallas Mavericks from H. Ross Perot Jr. to Mark Cuban in 2000.
Show me the money
What Davis is trying to pull off is quite uncommon in the annals of NBA ownership transfers because he's trying to do it with a relatively large group and a relatively small amount of his own money. When Cuban bought the Mavs, he simply wrote a check. When Bob Johnson paid his $300 million expansion fee to acquire the Charlotte Bobcats, he used Viacom stock.
Davis will probably have at least one investor putting up a larger sum than his own, but under a recent change in league bylaws, those investors will have to agree in their purchase agreement to cede control to Davis for making franchise decisions.
The change was made to avoid future fiascoes such as the still-unresolved Atlanta Hawks ownership dispute between Steve Belkin and his former partners, the new rules essentially boiling down to this: Each team now has one designated person, and one person only, making the decisions.
(When the Hawks agreed to a sign-and-trade agreement with Phoenix two summers ago to bring in Joe Johnson, Belkin balked while his partners OK'd it. The deal was delayed but ultimately went through, and Belkin successfully sued his former partners to gain control of the franchise, a verdict still being held up by an appeal.)
Under league rules, the minimum size of the share Davis must purchase to have control of the franchise is 15 percent of the team's equity valuation, which is established by subtracting the assumed debt from the total franchise value. Davis would take on between $100 and $154 million in debt (the exact number is still in dispute) for a team that lost $82 million over the past three years, which would mean -- with the franchise value set at $360 million by this sale -- he'll need to have between $31 and $39 million in cash (and it can't be borrowed money) for the sale to close.
"The money is there," Davis said.
Rarely are sales of NBA teams this prolonged, and the league made its impatience clear Tuesday in a statement from deputy commissioner Joel Litvin that expressed frustration with Davis:
The NBA has not yet received from Messrs. Davis and Laettner sufficient information to conduct our review of their proposed purchase of the team, in accordance with NBA rules. Among other things, and despite numerous requests from the NBA, we have not been provided with important information about other potential investors, including the sources and amounts of funding that they would supply.
Put up your Dukes
Davis has been forbidden by the NBA from commenting on any matters pertaining to the Grizzlies other than his acquisition bid, and he has been playing his cards close to the vest -- though misplaying his hand at times, too -- while the sale remains pending.
He explained that he did not provide Hyde and the other minority investors with any financial information because he was unsure whether they would use that information to influence their decision on whether to match his offer.
That may not be the best way to please a prospective future partner, but it was a calculated move Davis believed he needed to make to further his pursuit of what he called a career dream.
Davis has vowed to move his wife and two young sons from Washington (where they live in the former Irish embassy and have a jail cell in their basement) to Memphis and to also invest heavily in the renaissance of the city's downtown, converting old buildings into loft rental apartments while marketing the FedEx Forum, built smack dab at the end of the blues mecca of Beale Street, as a destination for the region.
During a somewhat contentious meeting with reporters and editors at the city's daily newspaper, The Commercial Appeal, Davis was agitated that his purchase bid was being met with more skepticism than support.
At first glance, you might think Memphians would be more welcoming to a young black entrepreneur who wants to move to town and further the development of a downtown that was mostly boarded up 20 to 25 years ago, especially when the alternative is leaving the city's only pro sports franchise in the hands of an out-of-town owner anxious to sell.
But people in Memphis are still paying off the Grizzlies' old home, the Pyramid, built by another out-of-towner who came in with big talk and big plans that didn't exactly work out, and they don't want to be fooled twice -- especially because resentment still lingers over the manner in which public funding for the FedEx Forum was not voted on by the taxpayers.
Davis also didn't do himself any favors the day the purchase was announced when he said his friend and former teammate at Duke, Christian Laettner, would be joining the team. Reporters actually laughed out loud at Davis when he mentioned it, thinking he was joking. But Davis was serious, and West and Fratello were incensed that an incoming owner was trying to dictate having his buddy on the roster.
Davis had to sheepishly quash the Laettner furor two days later by issuing a statement saying Laettner would not be playing, and that was about all anyone heard from Davis until last weekend.
During the interim, The Commercial Appeal published details from a leaked document disclosing some of Davis' financing and operational plans, part of which said Davis and Laettner would use their basketball expertise to select the right players.
Many took that as a dig at West, among the most respected front-office executives and decision makers in the NBA. Davis committed another faux pas when he told The Wall Street Journal that Memphis would be nice "if it had a downtown" -- a comment he says he was misquoted on, claiming he actually said "if it had a 24-hour downtown."
What now for Pau?
The document cited by The Commercial Appeal also said Davis planned to cut costs by $26 million. That left some in the team offices fearful of job cuts (although the bulk of the savings would come from the expiring contracts of Eddie Jones and Chucky Atkins). It also prompted other teams, including the Boston Celtics, to phone the Grizzlies and inquire whether they might trade Gasol, their franchise player who is under contract for $63 million through 2010-11.
The speculation of a Gasol deal became so rampant that Heisley telephoned the team's beat writer and screamed, "We're not trading Pau Gasol," though Heisley's statement still rang hollow with many since he is someone, after all, who in another six weeks might have no say whatsoever on Grizzlies matters. Davis is believed to favor building around Gasol, though he has not said so publicly.
Whither the Czar?
Before the season, West told Fratello -- presumably with the blessing of Heisley and Davis -- to implement a high-tempo style. West had assembled a new core of athletic young players, including Rudy Gay, Hakim Warrick, Kyle Lowry (before he was injured) and Dahntay Jones. Gasol, who thrives in the half court, had broken his foot in September at the World Championship.
Fratello insists that, despite his reputation, he is not wedded to a methodical style of play, but once again this season the Grizzlies are playing at one of the slowest paces in the league. In November, with the Grizzlies at the bottom of the Western Conference, where they remain, Heisley openly questioned Fratello's lineup choices and the team's slow tempo.
Fratello says some of his players have been affected by the limbo, while West conceded there is a split in the locker room between the younger players who want to play a wide-open game and the older ones who don't.
All of this makes Fratello, who is in the last year of his contract, the odds-on favorite among himself, West and Gasol to be the first man overboard, especially if the sale to Davis' group is approved by the NBA's board of governors.
Will 'The Logo' go?
Under normal circumstances, West would be able to solve some of the problems through trades. But his hands are tied just like everyone else's while the waiting game plays out.
More clarity about West's future is part of that waiting game. Though Davis has said he'd like to offer West a lifetime contract, many believe West is leaning toward leaving at the end of this season if the sale goes through and then finding one more big challenge in some other NBA city.
"It's been a very awkward time because of the impending sale," said West, whose contract as team president expires June 1. "After that, I really don't know. But in Brian's defense, I think his ownership would be a real positive because this is something he really wants to do with his life."
People close to West say he has been especially frustrated by being forced to hold all personnel moves pending the sale decision. He'll have a little more than a month between the Jan. 15 closing date and the Feb. 23 trading deadline to negotiate trades.
But if Davis prefers to let the contracts of Jones and Atkins expire so their salaries can come off the cap at season's end, West will not be able to use them as the valuable trade chips they have the potential to be (because West would have to trade them for players with similar contracts that probably would extend beyond this season).
If the sale falls through, though, Jones' expiring contract could be a commodity (just like Penny Hardaway's expiring contract last season) that alters the entire NBA trading landscape in the month leading up to the deadline. Just like everyone in Memphis, we'll all have to wait and see.
If Davis is to be taken at his word, this deal is going through. And that's when we'll start to know just how long West, Fratello and Gasol will be around.
Chris Sheridan covers the NBA for ESPN Insider. To e-mail Chris, click here.
MORE NBA HEADLINES
- Rondo to make Mavs debut; Spurs sit top 4
- Silver on tanking: 'No team is trying to lose'
- Pierce: Wizards need to 'build better habits'
- Sources: Rondo gives Mavs edge with O'Neal