Cuban has sold the Mavs to Adelson-Dumont Family

[F Gump]

First, let me say that outside of your original "maybe he's going broke" assumption, your thoughts on this topic have been fantastic and advanced everyone's thinking and knowledge of this tremendously.  I think the real estate angle using eminent domain to establish an anchor of further development makes a great deal of sense.  The camel is putting its nose under the tent.  Even your assumptions (possibly knowledge) about the location is also probably spot on.

A couple of further thoughts...It has been reported that Mrs. A. liquidated 10% of her LVS holdings for this.  so, 2 of 20?  She's reported to be worth $31 billion.  If you break it down to real world terms, I think it is easier to think about this (ultra-rich or not).  Imagine you are a retiree from some local company.  You've got $1mm in the bank and you've built up $2mm of company stock through options.  Mark Cuban is willing to sell you a majority interest in his company for $200,000.  He's willing (anxious) to continue running things.  The books don't look bad on a year to year basis.  The ROI for the last 15 years is good and you are also taking out all minority partners in the deal.

a. As you know from your profession, minority partners are often the managing partner of an enterprise.  Even if Cuban is nothing more than a useful fool from an operational standpoint, he probably brings local credibility (which is probably useful in a development based around Cuban's team that uses eminent domain). 

b. PE firms often leave the seller with an interest in the company as a way to align their interests.  I've seen a good number of instances (in my limited experience with a client selling to a PE firm) where the seller continues to run the operation.  I've got one recent case where the seller was allowed to participate in add-on transactions with the PE firm (using money from the original sale).  

I think if one is posting here one probably looks at Cuban from a mostly basketball standpoint.  In the context of this deal though, I think he's valued differently.  I also don't think the structure is all that unusual (outside of basketball).  The kicker, back to our retiree with $3mm, is that the $200,000 investment is a ticket to a really big payoff from real estate down the road (and front row seats at an occasional game).  Mr/Mrs Retiree has always loved real estate and would love to diversify some of their single-stock exposure into that at some point.  This deal provides an anchor (at mostly public expense) that you just can't buy outside of owning a team.  If you think back to the money that has been made on the land around AAC, I don't think a casino is necessary for this to go well for Mr/Mrs Retiree.  If it happens, all the better.

Good stuff ^.

a. I would agree that an owner of the minority (or not the one with the plurality, if there's no majority owner) CAN BE the managing partner, but I wouldn't say that is common. Control by someone other than the biggest shareholder is used with some regularity when a family with big assets tries to set up structure to avoid inheritance taxes (but this could not be for that purpose, since Adelson is not an heir of Cuban). But way more often, the partner who has the majority share also is getting full control, able to outvote the other partners. GP/LP setups can work differently, but usually retain the idea of the biggest share having full control.
... BTW about the minority owners alongside Cuban previously, the fact they got out is fairly standard stuff for a minority partner when a team is sold. Unless the new buyer is wanting to buy 100%, his money goes first to buy out the smallest shareholder if they want out (or they can stay in, if they prefer), and up the ladder by amount owned, and continuing until all their purchase money is spent, with all getting paid the same per 1%. In this case, they all sold.

b. Yes, your idea is insightful that a partnership works best when the structure has a setup that aligns the interests for when future decisions are made. You worded it better than I have. That was my point about the spending -- if Cuban is going to have any discretion over team spending, then the fact that he owns a big chunk of the team means he has incentive not to be wasteful, as he is spending his money too. And a cash call hits him, too.

c. Yes, a new Arena will bring real estate opportunity no matter whether there's a casino or not. As to the casino, that could be as much a "Cuban Idea" as Adelson, because if you do a survey of sports owners and casinos, you will find that it's already a growing theme of "we want a new arena, and a casino district with it" even in states who don't allow casinos. The Mets is one of those teams. Cuban reportedly has been thinking of this for several years, in conjunction with his next arena which won't open until at least 2031. I think that when the first pro franchise moved to Vegas, it created financial fantasy dreams for owners elsewhere.