Hoop dreams come true — Fertitta pays record $2.2B for Rockets
Given a second chance, Houston billionaire Tilman Fertitta was not going to fall short again, even if he had to spend a record $2.2 billion to fulfill “a lifelong dream” of owning the Rockets.
Fertitta, who fell just short of his bid to buy the Rockets when Leslie Alexander purchased the franchise in 1993, reached agreement to purchase the team from Alexander on Monday.
Alexander and Fertitta agreed on a $2.2 billion sale price, according to three individuals with knowledge of the deal. The sale, when approved by the NBA Board of Governors, will exceed the previous record price of an NBA franchise of $2 billion when Steve Ballmer bought the Los Ange-
les Clippers from Donald Sterling in 2014.
“I am truly honored to have been chosen as the next owner of the Houston Rockets,” Fertitta said in a statement released by the team to announce the deal. “This is a lifelong dream come true.
“Leslie Alexander has been one of the best owners in all of sports, and I thank him immensely for this opportunity. He has the heart of a champion. Lastly, out of respect for the NBA’s approval process, I can say no more other than I am overwhelmed with emotion to have this opportunity in my beloved city of Houston.”
Agreement on the sky-high price tag came just seven weeks after Alexander’s stunning announcement that he would sell after 24 years as the team’s owner. The only other serious buyer to express interest was Dan Friedkin, the CEO of Gulf States Toyota.
Fertitta will purchase the franchise with no partners. The sale includes the operating rights to Toyota Center, a valuable part of the franchise that gives him control of other events in the facility and revenue generated from them.
Fertitta, 60, is a Galveston native, and the sole owner of Fertitta Entertainment, Inc. He is the chairman and CEO of Landry’s Inc., which includes more than 50 restaurant brands including McCormick & Schmick’s, Chart House, Landry’s Seafood, Saltgrass, Morton’s The Steakhouse, Grotto and Vic & Anthony’s. He also owns Golden Nugget Hotels and Casinos, The Westin Downtown and the San Luis Resort along with several entertainment venues, including The Kemah Boardwalk and Tower of Americas in San Antonio.
Owning casinos not an issue
Fertitta, who briefly held a small portion of the franchise when Alexander bought the team, must go through an NBA approval process that can typically take at least another month.
The next Board of Governors meeting is scheduled for late September, which could be too soon to fully consider the transfer of ownership. Approval can be done electronically without a formal meeting. Three-quarters of the league’s Board of Governors (owners) must approve the sale for it to be complete.
Fertitta’s casino ownership is not considered an issue because several current owners have stakes in casinos. Former Sacramento Kings owners Joe and Gavin Maloof also owned a casino and hotel in Las Vegas.
Fertitta assumed a far greater public profile in recent years as chairman of the University of Houston Board of Regents. He was instrumental and outspoken in the university’s ultimately unsuccessful bid to join the Big 12 and in the selection of Major Applewhite as football coach and donated $20 million for naming rights to the school’s new basketball facility.
“He looks at issues from 50,000 feet and can ask questions that go 10,000 feet,” UH president Renu Khator said. “He’s going to bring the same energy, enthusiasm and smartness to anything he touches, including the Rockets.”
Fertitta is also the host of the cable television show “Billion Dollar Buyer,” a reality show.
The Rockets were able to get a record sales price because of a combination of factors, including the league’s $24 billion television deal that runs through 2025.
The Rockets have consistently ranked in the NBA’s top five in revenue and operating income and Toyota Center has undergone repeated upgrades and the lease runs through 2033.
The Houston market is fifth in the size of the metropolitan statistical area and eighth in designated media market. It is the fastestgrowing market in metropolitan area population of any among the nation’s top 20.
The Rockets also have extensive ties to global markets, especially in China, bringing potential for additional corporate partners.
Similar management styles
The team itself is considered among the league’s best, finishing with the third-best record in the NBA last season and since signing nine-time All Star Chris Paul to help MVP runner-up James Harden.
Harden is signed through the 2022-23 season, following agreement in July on a four-year contract extension that gives him the richest contract in league history.
Paul, however, will be a free agent after the season. Keeping Paul will likely be Fertitta’s first significant free agent recruiting effort as he steps into a role that Alexander increasingly assumed in recent years.
Though far more comfortable in the spotlight than Alexander, Fertitta is considered to have a similar management style. Both have been hands-on in the operation of their businesses and expect to be kept well-informed about decision-making, but they are not known to micromanage. Fertitta has been deeply involved in UH decision-making but does not have a reputation for being involved with day-to-day coaching decisions.
There have been no indications yet about whether he will keep the current management team in place, though Alexander signed his leadership — CEO Tad Brown, general manager Daryl Morey and coach Mike D’Antoni — to long-term contracts before opting to sell the team. Changes following the sale of a franchise are more common on the business side, though few franchises that have had the success the Rockets have enjoyed have been sold in recent years.
Alexander, 73, purchased the Rockets in 1993 from Charlie Thomas for $85 million to beat an $81 million bid from Fertitta. Alexander announced his plans to sell the team in July to leave the grind of running a team and concentrate on philanthropic efforts. He donated $10 million to Sylvester Turner’s Hurricane Harvey relief fund last week.
“I am excited to welcome and pass the torch to Tilman,” Alexander said. “He is a Houstonian, business leader and committed to the success and excellence of the Rockets both on and off the basketball court.
“I have personally known Tilman for over 24 years and don’t think I could have found anyone more capable of continuing the winning tradition of our Houston Rockets.”