How Michael Jordan Outsmarted Robert Johnson And Herb Kohl

Apr 20 2014, 10:52am CDT | by

The agreed to sale of the Milwaukee Bucks last week by Herb Kohl to Marc Lasry and Wesley Edens for $550 million shows how Michael Jordan outsmarted a billionaire and a U.S. senator.

In June 2003, Jordan was considering whether to either invest in the Bucks or the NBA’s expansion team in Charlotte. Kohl was looking to get $170 million for his team, and BET founder Johnson, who had bought the Bobcats six month earlier for $300 million, wanted to bring in Jordan as an investor. Jordan was looking to invest $50 million of his own loot for which he wanted managerial control.

But the senator decided not to sell the Bucks in to the former Chicago Bulls great, and Jordan did not invest in the Bobcats because Johnson would not let him run the team.

Since then, the Bucks have gone through a decade of futility on the hardwood and have stayed afloat with the help of revenue-sharing subsidies. Meanwhile, the Bobcats quickly became a debacle and Johnson eventually sold the entire franchise to Jordan for just $175 million (the enterprise value consisted of $150 million of debt and only $25 million of equity).

Jordan has turned the Bobcats around. The team posted a mark of 43-39 this year and made the playoffs for just the second time. And the Bobcats play in a bigger market than Milwaukee and have a more lucrative arena.

No doubt, Kohl has made out well on his $18 million purchase of the Bucks in 1986. But there is also no doubt that Jordan’s $25 million of equity has increased much more with the Bobcats than it would have with the Bucks.

 
 

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