A dispute over the completion of a deal that would have seen minority owners Marc Lore and Alex Rodriguez acquire majority shares of the NBA’s Minnesota Timberwolves and the WNBA’s Minnesota Lynx from principal owner Glen Taylor started mediation Wednesday, people with knowledge of the matter told the Star Tribune.
Glen Taylor, Marc Lore and Alex Rodriguez head to mediation over Timberwolves, Lynx ownership
If parties can’t come to a resolution over the cancelled sale, arbitration is the next step.
The Minnesota Star Tribune
May 1, 2024 at 12:31PM
The mediation, supervised by a former Hennepin County district judge, is aimed at negotiating a resolution or settlement to avoid further legal action.
At the heart of the dispute is whether Lore and Rodriguez met the obligations of their contract with Taylor to make their final payment installment to acquire majority control of the teams. Lore and Rodriguez were expected to make their third and final installment of a $1.5 billion payment to Taylor for the teams by March 27, giving them 80% ownership of the franchises. The next day, Taylor said in a statement that the acquisition option had expired because Lore and Rodriguez missed the deadline.
Lore, a billionaire tech entrepreneur, and Rodriguez, the former baseball star-turned-investor, said they secured the necessary funding for the deal and submitted the paperwork to the NBA on time. That deadline can be extended 90 days, they said, if the sides are awaiting league approval to finish the acquisition.
The Timberwolves and Lynx are valued at a combined $2.5 billion.
Wachtell, Lipton, Rosen & Katz, a New York law firm representing Lore and Rodriguez, declined to comment. The Timberwolves and Lynx also declined to comment. Messages to attorneys representing Taylor, who also owns the Star Tribune, were not returned.
Negotiations are being held in Minneapolis.
Rick Solum, who retired from being a judge in 1998, is the mediator jointly selected by both parties, according to Sportico. In 2017, Solum mediated a dispute between former Gov. Mark Dayton and Republication legislative leaders, and in 2007, was selected to help settle how much the site of a new Minnesota Twins stadium was worth. He has also acted as a neutral mediator in cases involving the Minnesota Vikings.
According to contract details revealed in the 2021 lawsuit against Taylor by a shareholder opposing the sale, Purple Buyer Holdings LLC, the joint company owned by Lore and Rodriguez, and Taylor Sports Group, a company owned by Taylor, have to try to resolve any dispute by first “using a mediator agreed to by the parties.” It also says no arbitration demand “may be filed until the parties have completed the mediation.”
If mediation is unsuccessful, the parties will head to arbitration, a binding procedure for settling private disputes to avoid going to court. Because the claim exceeds $5 million, arbitration would be determined by a three-member panel. One of the members has to be a retired Hennepin County or federal district court magistrate judge from the District of Minnesota.
Each side can choose an arbitrator for the panel. In the event Taylor, Lore and Rodriguez can’t agree on the retired judge selection, a chief judge of the Hennepin County District Court will choose for them.
The arbitration must then be completed within six months, according to the contract. During the proceeding, both parties can bring in evidence, which could include the documents Lore and Rodriguez submitted to the NBA.
The arbitration panel could rule in Taylor’s favor, determining he was allowed to say the team was no longer for sale. The panel could also rule Lore and Rodriguez were allowed a 90-day extension and Taylor must sell them the team, or pay monetary damages.
If Lore and Rodriguez win the arbitration battle, they still would have to go through and complete the NBA’s approval process, but a decision in their favor would likely expedite the ownership transfer process.
If one side doesn’t agree with the panel’s ruling, they can challenge the arbitration award in a public court of law, but only under certain circumstances, said Charles Reid, a University of St. Thomas law professor. Under American Arbitration Association commercial arbitration rules, which the contract says the arbitration must follow, a side can challenge the award if there’s reason to believe it was won through fraud or corruptive means, obvious partiality, or if the arbitrators engaged in misconduct or exceeded their powers, Reid said.
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