Canzano: Digging up bones in the Trail Blazers ownership mess
Thoughts on the Wall Street Journal's piece.
Paul Allen’s estate has been a subject of a lot of discussion since he died from cancer in 2018. The Wall Street Journal took a deep dive on the matter over the weekend in a piece headlined “The Mystery of the NBA Team That Billions Can’t Buy.”
Phil Knight and Dodgers co-owner Alan Smolinisky would like to buy the team. They’d love to develop the area around the NBA arena, anchor the franchise in Oregon forever and regularly drop confetti on the heads of delighted Blazers fans.
Knight and Smolinisky submitted a $2 billion written offer to buy the team last year. Allen’s sister, Jody, was unwilling at the time to have anything resembling a conversation about the sale of the NBA team.
Per the WSJ piece:
So Knight and Smolinisky tried again, according to a person familiar with their plans. On numerous occasions, including earlier this year, they made it clear to Jody Allen that they still wanted to make a deal. They indicated that they realized the price had gone up and that they were willing to pay more than their initial offer, this person said. Again, Knight’s calls to Jody Allen were diverted to (Bert) Kolde, and nothing came of the brief discussions.
A few months ago, Smolinisky even sent a handwritten letter to Jody Allen seeking common ground and saying he and Knight would love to discuss the Blazers with her, according to a person familiar with the matter. In response, Smolinisky received an email from someone replying on Jody Allen’s behalf with a familiar message: Paul Allen’s sports teams aren’t on the market.
Rachel Bachman, who reported and wrote the piece, did a great job laying out the issues. She’s a former newspaper colleague and her effort here was terrific. I’ve also been talking with involved sources for several months and have a few thoughts.
The NBA would very much like the Blazers to be sold. Uncertainty around ownership isn’t good for the league. Commissioner Adam Silver could assert himself in this mess publicly, but he’s a tactful leader who prefers to use a scalpel vs. a sledge hammer. He’s also close with Knight. I had one league source tell me that they believed Knight’s public stance on wanting to buy the team was likely given a blessing by the league. There’s not a lot of upside for Knight to go so public with his wishes — unless the move was designed to increase public pressure.
Knight, 85, wants to own the NBA franchise. Be sure. The WSJ piece made that evident. It’s a legacy play for him. Smolinisky, 43, is an interesting figure in this equation, too. He made his fortune in college at USC, buying student housing and becoming the biggest landlord in the region. He’s in this for the development angle. There’s massive upside if new owners can get control of the franchise, the arena, and turn the surrounding region into a badly needed entertainment district.
Knight and Smolinisky are neighbors in the prestigious Madison Club in Coachella Valley. That’s where their plan to buy the Blazers was hatched. I wrote a column about it a few months ago. The fellow billionaires play the same championship-caliber golf course and frequent the same restaurants, spa and hiking trails. They’re both entrepreneurial in spirit. As a tandem, Knight-Smolinksy are the perfect partners.
What’s Bert Kolde’s role? I’m told the Blazers vice chairman and former Paul Allen college roommate will take the lead on whenever the franchise does get sold. I’m also told by multiple sources that Kolde will receive a “commission” for brokering the sale. So there’s definitely some motivation from him to get the best possible outcome and not wait 20 years to do it. The value of the franchise has skyrocketed in the last 24 months. Kolde may be waiting for the league’s new television deal to be negotiated to push for a sale, but he’s also at the mercy of the trustee — Jody Allen — who doesn’t appear in any hurry.
We keep hearing that it could take “10 to 20 years” to sell the team. Why doesn’t Jody want to move faster? Stubborn? Aloof? Power hungry? Likes to be viewed as “Queen Bee”? Pick your favorite theory. None of them are wrong.
That said, I had an interesting conversation two weeks ago with a source at Vulcan, Inc. There’s apparently another reason for Jody to slow-play the liquidation of her brother’s estate — she is collecting a management fee to be trustee. Unlike Kolde, Jody Allen won’t make a dime when the NBA team is sold. But In the state of Washington, trustees are allowed to take a reasonable annual fee. The figures vary, but I checked with a couple of estate attorneys who told me it wouldn’t be unusual to see a trustee annually collect 3-5 percent of the value of the estate to manage the trust. Let’s assume the Blazers are worth $3 billion. Jody could reasonably collect $90 million to 150 million per year on the team’s value alone. Could this help explain why she’s not in a hurry?
Jody Allen may posture as though she’s heavily involved and interested in the Trail Blazers, but we all know better. Multiple ex-team executives tell me she didn’t show much interest in the NBA franchise while Paul was alive. She even sometimes chided her brother for spending so lavishly on the team. I’m told she’s far more interested in the NFL’s Seahawks, but let’s extinguish the possibility that she’s holding Portland’s NBA franchise in a chokehold because she loves it dearly. She doesn’t.
Jody Allen’s track record isn’t a great one and I’m thinking the NBA commissioner can’t be comfortable with her as the “acting owner” of the franchise. In 2012, body guards claimed in sworn depositions that Jody sexually harassed them, purchasing tight, Euro-cut swim trunks and allegedly requesting they perform a “fashion show” for her. The guards claimed under oath that she directed them to smuggle animal bones out of Africa and Antarctica. At least 15 ex-members of the personal security detail filed civil suits against the Allen family, with more than a dozen settling out of court. The Allen family attorneys called the accusations “meritless.” USDA records, however, reveal that inspectors destroyed 72 pounds of giraffe bones belonging to Vulcan, Inc.
I think we’re having an important discussion. To Jody, the NBA franchise is simply a piece of her brother’s estate. To the multiple beneficiaries of his will, however, the Blazers are fuel. There were a line of passion projects and charities that Paul Allen intended to fund. At some point soon, they should be funded, per his wishes.
Also, Portland’s NBA franchise needs to go free.
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