Billionaire Bob rejects Charity Proposal

discuss...


SOURCE: Charlotte Observer


Bobcats owner blocks donation

Sabates wants to give his share of team to health care foundation; Johnson rejects proposal
RICK BONNELL
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Charlotte Bobcats managing partner Bob Johnson has blocked minority owner Felix Sabates' effort to contribute his share of the team to charity.

Sabates wants to give his Bobcats stock, which he values at about $1.34 million, to the foundation that supports Carolinas HealthCare System. Sabates sits on the board of that system.

"I was surprised Bob wouldn't approve this, considering it's a donation," Sabates told the Observer in an interview Friday.

On Nov. 29, Sabates received a letter from Johnson's attorney denying Sabates' request to transfer the shares. The attorney, Van Sinclair, claimed the NBA does not allow not-for-profit or charitable entities to own an interest in its franchises.

A subsequent letter from Sabates to the health care system quoted Johnson as saying the NBA had nothing to do with the decision. Instead, Sabates wrote, Johnson told him he "does not wish to have any charitable organization in partnership with the Charlotte Bobcats. ...

"I am really surprised at his decision. I thought this would be a great opportunity for the Bobcats to become a real part of this community."

The Observer obtained these letters and other documents through the N.C. public-records law.

Johnson and Sinclair both declined to comment on the issue, through team President Fred Whitfield.

Sabates wrote to Sinclair that his proposed donation was no reflection on the Bobcats organization. Rather, "I have spent the last several months rearranging my estate planning, and this has been recommended by my Trustees and Accountants."

In an effort to relieve any concerns Johnson might have, Sabates offered to pay any cash calls (requests for money to cover potential losses) on the health care system's behalf for the next five years.

Presbyterian Hospital serves as the Bobcats' official health care provider, while Carolinas HealthCare System has the same marketing tie to the NFL Carolina Panthers.

Sabates is experienced in sports investing: He once owned a piece of the Charlotte Hornets and various NASCAR teams. His piece of the expansion Bobcats is less than 1 percent of the original $300 million franchise fee.

Sabates says he understood when he invested in the Bobcats that Johnson could veto any transfers of ownership. He said Johnson's authority is typical in this sort of partnership, but he can't understand why Johnson would have a problem with the health care foundation owning Sabates' stake.

Marc Ganis, a Chicago-based sports-finance expert, said Johnson could have a legitimate reason not to want a health care foundation or other not-for-profit organization owning a piece of his team.

"It could be a problem because of the public or semi-public nature of those entities," Ganis said. "They are subject to public disclosure (laws) that could give reporters access to the team's finances.

"In essence, you could be turning a private business into a public one.

"Also, the fiduciary interests of a public hospital are very different from a private business. What if (the team) takes on as a sponsor something the hospital wouldn't want to be associated with?"

That doesn't mean there's no way for the health care system to benefit. Ganis said plenty of charities have been helped by the profits a major-league team generates. The alternative, Ganis suggested, is creating a foundation that benefits a particular cause or entity.

Ganis said the New Jersey Nets used to be structured that way, with some of the team's profits going to a foundation that aided programs in the city of Newark.

`A very positive spin'

In a letter to Sinclair dated Nov. 14, Sabates outlined his proposed gift: Sabates would continue in the ownership group as the foundation's representative and "they have no intention of selling (the stock). This is a long-term hold for them."

Sabates then outlined how his contribution could help the Bobcats' image. The team has struggled in its first three seasons to sell tickets and knit itself into the community. It has suffered from a hangover over the Hornets' departure for New Orleans and the controversy over public money spent to build an uptown arena.

"Van, this could be a very positive spin for the Bobcats since the Carolinas Healthcare System is a well respected system and the Board consists of the Who's Who of Charlotte from Ken Thompson (Wachovia chief executive) to Ken Lewis (Bank of America chief executive)," Sabates wrote.

"I think this move will be well accepted by the community, and at the end of the day it will do nothing but help the Bobcats."

On Nov. 29, Sinclair replied, "the NBA has advised me that they do not allow a not-for-profit entity or a charitable entity to own an interest in an NBA team. Therefore, we cannot proceed with your request."

NBA spokesman Tim Frank said Friday there is nothing in the NBA's constitution specifically barring a not-for-profit or charitable organization from owning stock in a team. However, Frank said the league's Board of Governors must approve any ownership change.

In a letter dated Dec. 7, Sabates told Carolinas HealthCare System President Michael Tarwater that Sinclair's explanation was false:

"I received a call from Bob Johnson last night," Sabates wrote, "and he said that the NBA had nothing to do with the decision to reject my offer and that he had made the decision himself."

 

Don't blame him for it. The charitable organization will have so many boards to pass through something simple, its a rival of the current supporting hospital, and you're working with a not for profit organization which can create red tape as to what you can and can't do.

Too damn many red flags there. Better to just stay away from that.

 

I don't blame him one bit either.

 

So when he sells to Larry Bird does it become the Charlotte Legends?

 

It's stock in his company. I don't know I'd want any corporation's charity to hold partial control in my own private investment.

If Felix wants to be charitable, sell off his part of the investment, donate that money. It's not as if Felix doesn't have money.

 

I don't think Bob Johnson is trying to develop roots in Charlotte, I believe he wants his team to be fit, trim and ready....for the move to Kansas City. He's probably giving this another few years, and if he can't get some buzz going, ie. ticket sales, big profits, or a corporate sponsor for the Arena name, he's gonna pull his team and go for a better, bigger market, hey Las Vegas Bobcats ain't too bad either. I guess I may go back to being a Bullets fan, oh sh*t wait, now I'll be out of a F'ing team, allright, now I'm pissed!

 

If Bob leaves he has to pay off the arena... It's not going to happen