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This page contains a single entry from the blog posted on February 2, 2007 4:46 PM. The previous post in this blog was Super (slow) bowl. The next post in this blog is Big weekend. Many more can be found on the main index page or by looking through the archives.

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Friday, February 2, 2007

Bankrupt billionaire buyback

Paul Allen has reportedly signed a letter of intent to buy back the Rose Garden arena from the pension funds and other lenders that he flipped the bird to a few years back, declaring bankruptcy for his real estate company and walking away from his existing mortgage. Without the arena, Allen's Trail Blazer basketball team was an unspeakable, horrendous money-loser, as opposed to a simply awful one. With the new deal on the building in place, the Blazers are back on track for a return to sound, eight-digit-a-year losability.

It will be quite interesting to see the terms of the final deal, if one is indeed reached. I hope the lenders (who were, in part, investing my own pension funds) get a good pound of flesh out of the guy. When it comes to business sense, he's strictly Windows 95, and on this particular investment, he's behaved like a true schmo.

Comments (23)

There's a bunch of talk about "this guarantees that he'll keep the team in Portland." Hard to see how that's the case. It makes it somewhat less likely that he'll move the Blazers to Seattle, but with Allen -- literally -- there are no guarantees.

My first reaction was it's easier to sell them as a package than as distinct entities.

When are the Blazers leaving town? It can't be soon enough to suit me, then maybe we can get a real sport like women's curling. Generally, the best thing that could happen to pro B. Ball is to have manditory integration for all teams. Just maybe there then would be some player class and decorum.

"When it comes to business sense, he's strictly Windows 95"
You are too kind, try DOS 2.0

Funny how we don't hear anything anymore about "broken economic model."

Since the Hornets are definitely moving back to New Orleans in 2007-08, that leaves a hole in Oklahoma City. The Sonics' ownership won't get a dime out of the WA legislature (they asked for $300 million when the WA leg wouldn't even give Schultz $200 million), so when their Key Arena lease is up, they're off to OKC.

While some say that means the Blazers are bound for Seattle, I don't think it does. Apparently the Milwaukee Bucks are nearing the end of their lease and are having trouble getting a new arena deal. Unlike the Blazers, who have a no-move clause, the Bucks have no such clause.

So after the Sonics move to OKC, Allen sells the Blazers to a local group and buys the Bucks and moves to them to Seattle.

Winners in this scenario: Paul Allen, Oklahoma City, Seattle (who gets a local hero as owner) and Portland (because we're not owned by a whining loser anymore).

Losers in this scenario: Milwaukee (whatever).

It doesn't solve the Seattle arena problem, but if Allen wants to consolidate his assets in Seattle and get out of the Portland game, he could truly be the hero in Seattle and maybe leverage some of that goodwill into a new arena. Bellevue looks ripe for it, they're got the land, they're getting light rail in a few years, they're becoming a mini-downtown anyway, and most basketball fans are already on the East side of Lake Washington anyway. Seattle proper is mostly going the condo/transit route, like Portland. Sports arenas beyond the ones already built are not high on their priority list.

Allen sells the Blazers to a local group

This didn't work when it was Allen selling the team and a smart group of financial people simultaneously selling the building. Will it work when it's all Allen?

we can get a real sport like women's curling.... have manditory integration for all teams.

For you folks out there who are ready to jump on anything you don't like on this site, let the record show that I strongly disagree with both of those sentiments.

I just got a breathless e-mail from Steve Patterson, head of the Blazers. It's pretty much the same as what we heard this afternoon -- suddenly this development is the solution to everyone's problems, and we're supposed to be happy! happy! happy!

Other than that, it's interesting that he talks about "a letter of intent under which Paul Allen will acquire PAM, the owners of the Rose Garden." Sounds like a stock deal, rather than an asset deal, FWIW.

The e-mail raves on and on, including:

Now that we are a critical step closer to working within financial terms that can allow the team to succeed, we are eager to focus our energy on fulfilling our mission to make this franchise "The Pride of Portland" once again. This is a victory for the City of Portland, the Trail Blazers, and the NBA.

Whatever, bub. You could have done this two years ago, and spared us all the drama.

This is a good thing, Jack. It does repair the "broken financial model."

This city needs the Blazers. This news is a pretty good indication that the team will stay here.

That was always one of the objectives of the Terry Porter group, and I can say that the people involved are very encouraged by this news.

Good to hear, but if you can figure out this guy and his minions, you should get an immediate Ph.D. in psychiatry.

All today's sudden feel-good p.r. may just be a bargaining ploy. DOS Boy likes to think of himself as a smart businessman, which is laughable. As I say, it will be quite interesting to see what kind of deal, if any, emerges from this.

To those of us who have suffered through all of Microsoft's operating systems, I think the appropriate comparison to Allen's business sense is Windows Millenium Edition.

To those of us who have suffered through all of Microsoft's operating systems, I think the appropriate comparison to Allen's business sense is Windows Millenium Edition.
JK: And competency is Linux.

Thanks
JK

"The Pride of Portland" Sorry Blazers but that title now goes to The Tram.

The value of the team has dropped dramatically since Paul Allen and his minions gave up ownership of the building. The crappy personnel decisions did not help the value either.

The bottom line is though Global Spectrum has been a better manager of the Rose Garden than Vulcan. They put money into upgrades when Vulcan did not, Mike Scanlon has come into this community and mad a difference, plus the events at the Rose Garden have been more varied and plentiful since Global Spectrum has been in place.

What this means in regards to Allen owning the team in the future or moving the team remains to be seen. I do not believe that the Blazers have ever been locally owned. Larry Weinberg was from El Lay, and Allen is from Washington.

I have said before we as Portlanders are lucky in a sense that we have a wealthy owner and that for the majority of the time he has owned the team, he has lavished the wealth on his team (the private jet, the arena built with a large portion of his funds, spending on salaries over the salary cap) but him and the Vulcans have also made a bunch of decisions that have been bad for the community and the team.

"This city needs the Blazers" - Kremer.

No, it doesn't.

Paul Allen is the George W. Bush of Microsoft Billionaires...

Paul Allen's buying the stadium back is very nice. Having one major-league team in Portland is good for many residents. The Blazers now have good players, a good coach, and good management.

Two out of three ain't bad. I'd give management an A for this semester, but a career GPA of about a C.

8c)

I think it flunked out during the Whitsitt years. I think it's back though, maybe on probation.

Allen cannot own his black basketball players, and own his racist LIARS Larson, in the same town. One 'property' or the other has to go.

The Blazers still exist? What the heck do we need them for, now that we have a Roller Derby League?

This was something that was long over due. It is something in which it is used a number of times in the business world. Sure there were some people that got short changed, but that was the risk they were taking when they loned him the funds.
If I was in the same situation, I would do the same. I first would try to reason with the lenders, something in which I do believe Paul did but then I would file.

I believe it was the lenders who were trying to reason with Allen, not vice versa. Under the lease he has now, he has lost tons more on the team than he ever needed to. And I'll bet he won't get much of a deal on the building if indeed he does buy it back. The people who are managing the arena now are doing a much better job than he ever did.

The institutional investment groups that made this loan are extraordinarily smart and powerful. TIAA-CREF has $300 billion in assets under management. In contrast, Paul Allen has pretty much proven himself to be quite a boob when it comes to money.


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