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A new breed of firms vie for stake in NBA teams

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Last month, the owners of the Golden State Warriors quietly approached the National Basketball Association for approval to sell a minority stake in the team — not to another business mogul, but to a publicly traded blank-check company that had partnered with a private-equity firm, The Post has learned. 

The unnamed institutional buyers — who, according to sources, had the support of Silicon Valley tycoon Chamath Palihapitiya, a minority owner in the Warriors — were confident the NBA would OK them to buy the stake, sources said. 

But the NBA’s Advisory/Finance Committee put off a decision and the Warriors withdrew the request, figuring it was dead, according to three people with knowledge of the matter. 

The failed bid comes as professional sports teams — from the NBA to Major League Baseball — are squeezed by the pandemic, which has emptied out arenas and stadiums for a year now. Massive team losses have spurred crushing capital calls on investors. Many of them are now looking for an exit, but are finding that there’s a dearth of wealthy individuals willing or able to take their place. 

Enter Wall Street. The pandemic has opened the door to a flood of financial entities with names like RedBall Acquisition Corp. and Arctos Sports Partners hungry for a piece of the action. 

If they succeed, it could change the face of professional sports forever, but thus far they’re having trouble completing a single deal. 

Sources said Glen Taylor, billionaire owner of the Minnesota Timberwolves, went to the NBA a few months ago with a pitch to sell to Arctos, a private-equity firm formed in 2019, to buy small stakes in teams. But the idea was shot down because Arctos had not been approved by the NBA, sources said. 

Arctos also recently filed to raise money via a blank-check company that will be used to buy stakes in basketball or baseball teams that need capital to cover losses. This is happening even though neither the NBA nor MLB has approved the controversial idea. 

Also known as SPACs, or special-purpose acquisition corporations, blank-check companies list themselves on a public exchange like the NYSE in order to merge with a business and take it public. 

There are now five SPACs looking to buy stakes in pro sports franchises, according to SPACInsider, including Arctos, which on Feb. 23 raised $275 million for a blank-check company on the NYSE. 

Goal Acquisitions, formed by NBA legend Michael Jordan’s former agent David Falk, this month, raised $225 million after listing on the Nasdaq stock market. “Sports franchises . . . are facing a huge strain on cash flow, leaving ownership groups without the appetite, nor liquidity to continue franchise funding for an undetermined period of time,” it told investors in its prospectus. 

SportsTek Acquisition, formed by former Houston Astros General Manager Jeff Luhnow, last week raised $150 million via the Nasdaq. Sports Ventures Acquisition Corp., formed by sports investment banker Rob Tilliss, on Jan. 6 completed a $230 million IPO. 

Sources say various SPAC owners have contacted nearly every NBA owner in the past year. And there are many NBA owners — particularly small minority owners — that want the option to sell to the entities, these people added. 

Indeed, frustration appears to be building among some corners of the NBA’s ownership ranks over how slowly the NBA, headed by Commissioner Adam Silver, is working on a solution, sources said. 

“The pressure on Adam is extreme,” a source close to the NBA office said. 

In July, the NBA opened the door for a single private-equity firm — Dyal Capital Partners, a unit of Wall Street investment firm Neuberger Berman — to start buying small minority stakes in NBA teams. Dyal has reached agreements with some owners, but can’t complete the deals until after a new fund closing that’s expected next month, sources said. 

The NBA is also interviewing buyout firms beyond Dyal. In letting them in, Silver may need to loosen the NBA’s ownership rules. In particular, funds have asked him to waive an existing rule that says the NBA can force out any owner at any time that it finds is bad for the league. 

“Private-equity firms are super eager but the current provision is a non-starter,” a source said, adding that he believes Silver will make the exception. 

With private equity seemingly making more headway than SPACs, Warriors majority owner Joe Lacob is now speaking only to private equity firms in his efforts to sell a stake of at least 5 percent of the pandemic-fueled money-losing team, including billionaire Howard Marks’ Oaktree Capital Management, sources said. 

In its response to the Warriors’ SPAC request last month, the NBA raised concerns that letting these publicly traded entities invest in teams could artificially lower their values. Once even a sliver of a team starts trading on a public stock exchange, its valuation would be subject to the whim of investors. 

The NBA, sources said, is likewise concerned that SPAC ownership could lead to league financials getting revealed via public filings. 

Currently, the only publicly traded NBA team is billionaire James Dolan’s New York Knicks. It is owned by Madison Square Garden Sports, which doesn’t reveal the team’s financials. 

SPACs have also been courting MLB teams. RedBall Acquisition Corp., which last August raised $500 million, has been in talks for months to acquire a stake in the Fenway Sports Group, which controls the Boston Red Sox and Liverpool F.C. soccer team, but has failed to reach an agreement on price, sources said. 

Three-quarters of the MLB owners would need to approve even a minority stake sale to a SPAC. But whether they would OK it remains an open question — with one source saying many baseball owners have told him they would vote it down on sight. 

It’s why some Wall Streeters think basketball, not baseball, will be the next frontier for complex financial instruments. 

“Baseball guys are dinosaurs,” said one sports financier. “The NBA is a forward-looking league. If this is going to happen, it’s going to happen there.”

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Glasses retailer Warby Parker eyeing IPO as soon as this year

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Hipster glasses retailer Warby Parker is eyeing an initial public offering.

The 11-year-old business, which started out as an e-tailer before rolling out some 130 stores across the US, is considering an IPO as early as this year, Bloomberg reported on Wednesday.

The New York-based company has amassed a huge customer following by offering less expensive prescription glasses. Warby Parker raised $120 million in its most recent funding round giving it a $3 billion valuation, according to the report.

“We’ve always explored various financing opportunities in both the debt and equity markets,” the company said in a statement. “To date, we have successfully and deliberately raised money within the private market on favorable terms and have plenty of cash on our balance sheet. We’ll continue to make strategic decisions in line with our commitment to sustainable growth.”

Founded by college buddies Dave Gilboa and Neil Blumenthal, who met at the Wharton School at the University of Pennsylvania, Warby Parker has attracted some large investors including the mutual fund company, T. Rowe Price.

It turned it first profit in 2018, Gilboa told The New York Times at the time.

Warby Parker co-founder Neil Blumenthal
Warby Parker co-founder Neil Blumenthal
Brian Ach/Getty Images

Customers can get prescriptions through their apps on their smartphones and use cameras to pick out frames. The company also has an optical lab in Sloatsburg, NY where it produces lenses.

While Warby Parker is not the least expensive option, it beats Costco in a recent comparison with Costco charging as little a $126 for a pair of prescription glasses compared with Warby Parker’s least expensive pair at $95.

“As consumer walk into a LensCrafters or Sunglass Hut, they see 50 different brands of glasses but don’t realize that all those brands are owned by the same company that owns the store that they’re standing in, that probably owns the vision insurance plan they’r using to pay for those glasses,” Gilboa said in a recent CNBC interview.

“And so, it’s no surprise that a lot of those glasses are marked up 10 to 20 times what they cost to manufacture,” he said.

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Dogecoin hits new high boosted by DogeDay hashtags

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Dogecoin prices hit an all-time high on Tuesday, with a market capitalization above $50 billion, after social media fans used hashtags to fuel a rally in the meme-based cryptocurrency.

An 8,000 percent price surge this year has seen Dogecoin, which was launched as a satirical critique of 2013′s cryptocurrency frenzy, overtake more widely-used cryptocurrencies like Tether to become the fifth-largest coin.

While Dogecoin, whose logo features a Shiba Inu dog at the center of the meme, a represents only a fraction of bitcoin’s $1 trillion value, it can be traded on crypto exchanges and more popular mainstream trading apps.

“The Doge rally represents an interesting convergence,” said Diana Biggs, CEO of crypto start-up Valour, after Dogecoin’s price soared by more than five-fold in the last week to a record 42 cents, according to CoinMarketCap.

“A meme coin created as a joke for early crypto adopters whose community found that kind of thing to be fun, with now a new generation of retail investors for whom memes are a native language,” Biggs added.

Dogecoin fans used the hashtags #DogeDay and #DogeDay420 to post memes, messages and videos on Twitter, Reddit and TikTok, referring to the informal April 20 holiday to celebrate cannabis which is marked by smoke-ins and street parties.

“GIMME THAT DOGECOIN LAMBO!!! #DogeDay” one tweeted, referring to the Lamborghini car popular in crypto culture.

Dogecoin’s rise has come amid a surge in online trading of stocks and crypto by retail investors, stuck at home with extra cash because of the COVID-19 pandemic. It has not coincided with a growth in usage of the coin for payments or in commerce.

The same trend has spurred a boom in usage of online trading apps like Robinhood, and also fueled the social-media driven rally in GameStop stock that pitted retail investors against hedge funds earlier this year.

“It’s an extension of the same phenomenon that has led Tesla stock to be valued well beyond fundamentals and more recently to the GME (GameStop) short squeeze,” said Ajit Tripathi, head of institutional business at decentralised finance startup Aave.

Like other cryptocurrencies, Dogecoin’s price is heavily influenced by social media users including Tesla chief Elon Musk, whose tweets on the cryptocurrency in February sent its price soaring over 60 percent.

“If this goes as planned and everybody including Mr. Musk go ahead and just pour money into Doge on April 20th all at once Doge will reach prices that originally were not even conceptual,” a TikTok user said in a video promoting the coin.



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Amazon is opening a beauty salon in London

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Amazon is opening a hair salon in London — its latest odd lurch into new businesses as the pandemic continues to fuel the e-commerce giant’s torrid growth.

The Amazon Salon, unveiled in a Tuesday blog post, will occupy a two-story, 1,500-square-foot space in Spitalfields, a trendy neighborhood in East London that is also home to Amazon’s UK headquarters, which houses about 5,000 employees.

Indeed, the new salon, which will be open seven days a week, initially will only cater to Amazon workers. Members of the public will be able to make bookings in “the coming weeks” by calling, emailing or visiting the salon, the company says.

“This will be an experiential venue where we showcase new products and technology,” Amazon said in a blog post on Tuesday, adding that there are no plans to open other salons.

That will include making Amazon’s Fire tablets available at each station, allowing customers to use augmented reality technology to see what they look like as a platinum blonde, brunette or with highlights, the company said.

The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
Amazon

The salon will also test new “point-and-learn” technology, where customers can point at a product they are interested in on a display shelf and the relevant information, including brand videos and educational content, will appear on a display screen.

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