The owner of the Detroit Pistons
and Auburn Hills-based Palace Sports & Entertainment Inc.
has chosen to open negotiations to sell the basketball team and venue management company to Detroit pizza and sports industrialist Mike Ilitch, Crain’s
It’s believed that a deal will be worked out in the next 30 days.
Any sale of the Pistons will require a vote by the National Basketball Association‘s other team owners.
It’s unknown how much Ilitch might pay for the team and PS&E, and a final purchase price is likely still not set. Crain’s reported in September that bids were submitted around Labor Day.
Those involved have declined to comment.
Team majority owner Karen Davidson inherited the NBA franchise and Palace Sports when her husband, Guardian Industries Inc. Chairman Bill Davidson, died in March 2009.
She said in January she wants to sell the team, and over the summer said she thought a deal could be done by the start of the NBA season, which begins at the end of this month.
Davidson retained New York-based Citi Private Bank Sports Advisory to act as financial advisers on a sale.
Ilitch announced in August that he was interested in adding the Pistons to his holdings, which include the Detroit Red Wings, Detroit Tigers and the Little Caesars Enterprises Inc. pizza chain, which he co-founded with wife Marian in 1959. Buying the Pistons would means Ilitch would become the only owner of three franchises in the four U.S. major leagues.
The Ilitch organization is interested in building a new downtown arena for the Red Wings, to replace aging city-owned Joe Louis Arena, and owning the Pistons and having them as a co-tenant is widely seen as beneficial to financing a new facility.
The other major candidate to buy the team was California private equity billionaire Tom Gores, a Michigan State University graduate with deeps ties to the state and even deeper pockets. He’s founder of Beverly Hills-based Platinum Equity LLC, one of the largest private equity firms in the country.
The sale will be only the second time in team history that it has changed hands.
Bill Davidson bought the Pistons for $8 million in 1974 from team founder Fred Zollner, who had moved the franchise to Detroit from Fort Wayne, Ind., where it was founded in 1957.
The Pistons’ minority owners, who account for a collective 24 percent stake in the team, have agreed to sell their shares when Davidson reaches a deal.
Forbes.com has valued the team at an estimated $475 million.
Palace Sports is the umbrella organization overseeing the team and the Palace of Auburn Hills, DTE Energy Music Theatre and Meadow Brook Music Festival, which PS&E operates on behalf of Oakland University.
The venues are believed to generate about $70 million annually in revenue. Forbes estimates the Pistons last season generated $171 million in revenue and $47 million in operating income.
The PS&E venues collectively host 300 events for 3.5 million people annually and have long been entertainment dollar rivals to the Ilitch-owned or managed Cobo Arena, Joe Louis Arena, and Fox, Masonic and City theaters.
The Ilitches bought the Red Wings in June 1982 for $8 million from Bruce Norris, whose family had owned the team since 1955.
Mike Ilitch paid $82 million to buy the Detroit Tigers from Domino’s Pizza Inc. founder Tom Monaghan in August 1992.
The Ilitch’s Olympia Entertainment Inc. venue management organization remains in talks with the city, via the Detroit Economic Growth Corp., on a new lease for city-owned Joe Louis Arena.
Marian Ilitch separately owns MotorCity Casino.