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Heisley agrees to sell Grizzlies to tech entrepreneur Pera

By David Aldridge, TNT analyst
Posted Jun 11 2012 6:03PM

Memphis Grizzlies owner Michael Heisley confirmed Monday that he has an agreement in principle, pending league approval, to sell the team to 34-year-old communications entrepreneur Robert Pera. first reported the tentative deal, believed to be in the $350 to $375 million range, and an industry source said Monday that the belief is that the sale will ultimately go through.

Heisley has owned the Grizzlies since 2000, when the franchise was in Vancouver. He bought the team from then-owner John McCaw and said he would keep the team in Canada. But the Grizzlies moved to Memphis in 2001 after looking at potential locations in Anaheim and New Orleans.

Heisley said in a telephone interview Monday that Pera first came to him "two or three" months ago. At that point, Heisley again reached out to some of the team's minority owners, who had expressed for years a desire to purchase a majority stake in the franchise. But Pera was able to close the sale.

"I've made it clear for some time if somebody came up with the right offer, I'd consider selling the team," Heisley said. "It wasn't a secret in Memphis or, really, around the country. I wasn't trying to sell the team (actively). I don't know the gentleman who's buying the team personally; he came to see me."

While generally in decent health, the 75-year-old Heisley said he had a couple of "small" heart issues in recent years that helped accelerate his desire to sell.

"It's good for me and good for the city," he said. "Quite frankly, I'm 75 and I've stepped away from my businesses; I've turned them over to my daughter...I'm pleased that we were able to find a buyer and he's a rational, reasonable person. He'll be good for the city of Memphis. I think the situation in Memphis is a lot better than when I got there."

An executive with ties to Heisley concurred, saying it was important for him to leave the Grizzlies in good shape. "At least now he's got the team back to being competitive," the executive said.

Heisley took pains Monday to point out that there will be at least a two-month period before Pera can assume control of the team. Heisley had a tentative sale of the Grizzlies fall through a few years ago when he reached agreement with former players Christian Laettner and Brian Davis, who said they had a group ready to pay $360 million for the team. But that deal collapsed soon after it was announced.

Pera, Heisley said, would not move the Grizzlies from Memphis, which negotiated a series of onerous buyout terms from Heisley when FedEx Forum was opened in 2004. Initially, anyone attempting to break the lease with the city would have to pay the city $175 million, but that price has dropped in recent years.

The only way that the lease, which runs through 2021, can be broken is if the Grizzlies fail to meet certain benchmarks in either attendance, suite sales or club seat sales at the arena. If the Grizzlies fall short, according to a source with knowledge of the terms of the lease, Heisley could sell the team, but the city would have the right of first refusal to match the sale price. If the city didn't match, the new owner would be free to leave if he paid the buyout terms in full.

This past season's payment would have been $107 million, according to the source. The price drops to just under $105 million next year. In 2014, it falls to just above $101 million. In 2015, it falls below $100 million, to $97 million, and in 2016, the payment would be $94 million.

Heisley said Pera has not had any conversations with him about moving.

"We made it clear (to the local businessmen and minority owners) that there had been no discussions about moving the team on his part and our part, and that the team was there through 2021, minimum," Heisley said. "...The guy (Pera) had no real interest in moving the team. He didn't say he wouldn't, but he didn't say he would."

Heisley had had discussions last year with billionaire Larry Ellison, who has been looking to buy an NBA team. But the discussions stalled when Ellison made clear his desire to move the Grizzlies to California.

"We were not interested in getting involved in a relocation discussion," Heisley said Monday. "Mr. Ellison chose to go to the paper in San Jose, or one of his people did, which really did not please me too much."

Pera, a former executive at Apple, actually fell below billionaire status last week, according to Forbes, after his Ubiquiti Networks stock dropped below $15 a share, a precipitous drop from its high of $35.99 a share just last month. But Pera is still sitting on a pile of money after leaving Apple at age 25 to start Ubiquiti.

He told Forbes last year, "Apple's a great company, but I realized I wanted to have more success faster."

His company brought wireless networking to developing entrepreneurial areas in Brazil, Indonesia and the Czech Republic, creating stand-alone systems with their own software and farming sales out around the world. Pera reportedly lives frugally and still plays pickup basketball.

For his part, Heisley is still waiting for the vetting and approval process to run its course before he allows himself to reflect on his time in Memphis. "I'm not sitting here going out having a celebration tonight," he said. "When the contract is approved and they put up a big slug of money, then it will be done."

His 12 years as an owner in Memphis were often contentious. Heisley lived in Chicago and never moved full-time down to Memphis. When the Grizzles failed to win a single playoff game in their first three postseason appearances with Pau Gasol as the team's centerpiece, Heisley ordered the team broken up and its payroll streamlined, and he was excoriated after agreeing to send Gasol to the Lakers in 2008.

But Heisley insisted he would be willing to spend money again if the team warranted that investment, and he was as good as his word as the Grizzlies were rebuilt under general manager Chris Wallace and Coach Lionel Hollins. Memphis retooled around young players like Pau Gasol's younger brother, Marc, Rudy Gay and Mike Conley, and took a chance on forward Zach Randolph, who responded with a huge season in 2010-11, when the Grizzlies shocked top-seeded San Antonio in the first round of the playoffs.

Memphis lost to Oklahoma City in the second round of the playoffs, but the Grizzlies became a hot draw in town and followed up with a strong showing this season. The team suffered a disappointing first-round loss to the Clippers, losing Game 7 of the series at home. But the Grizzlies have a future as a smaller market team.

"This one appears to be moving and I'd be surprised if it didn't happen," Heisley said. "I guess my emotion is I'm praying that I severely don't regret it. I love Memphis. They've been good to me, the town and everything else. And quite frankly I love the NBA and love being involved in it. I'll still be very interested in it. Quite frankly, I just thought the time is right. If I had a team in Chicago I might not have done it, but it's such a long haul going back and forth down there."

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