(Bloomberg) - Mark Cuban has a knack for selling at the top.
Take the radio-streaming website he founded, Broadcast.com. It sold to Yahoo! Inc. for billions less than a year before the dot-com bubble burst.
Then there was his sale of a stake in a Canadian internet company before the announcement of a dilutive equity deal — so well-timed he spent years fending off insider-trading charges.
Now, the 65-year-old entrepreneur is selling a majority stake in the Dallas Mavericks, his most valuable investment and one that’s brought him nationwide celebrity, alongside his role on the Shark Tank television show.
Cuban bought the Mavericks for $285 million in 2000, meaning the reported $3.5 billion value would represent a return of more than 1,100%.
It also represents a significant premium to the $2.77 billion Mavericks valuation set by sports media firm Sportico in December. That’s the valuation used by the Bloomberg Billionaires Index to calculate Cuban’s $6.4 billion fortune, meaning his net worth would increase more than $700 million if the deal closes at the reported price, although taxes are likely to dent some of the gain.
The purchase by Miriam Adelson, the widow of casino magnate Sheldon Adelson, and her family came out of a desire by Adelson-owned Las Vegas Sands Corp. to build a casino and arena complex in Dallas, according to a person familiar with the company’s thinking.
Whether this goes down as another well-timed Cuban exit remains to be seen. Sports team values have reached stratospheric heights, driven by lucrative media deals as well as ultra-wealthy investors chasing a limited inventory of franchises.
Good Timing
Cuban bought the Mavericks after selling Broadcast.com to Yahoo! for $4.7 billion in 1999. The following year the bursting of the dot-com bubble saw Yahoo’s shares erase most of their value.
In 2004 he sold a stake in Canadian internet company Mamma.com. The company’s shares later fell after a dilutive private investment was announced. Cuban was hit with insider trading charges by the Securities and Exchange Commission, which said he avoided losses of more than $750,000 by selling before the announcement. He was found not liable at trial.
The $3.5 billion price tag for the Mavericks would be less than the $4 billion Mat Ishbia paid for the Phoenix Suns earlier this year, the highest price ever paid for an NBA team excluding minority interest sales. That deal also included the WNBA’s Mercury.
The past two years have seen records paid for teams in a variety of sports, including $6 billion for the Washington Commanders NFL team and $5.4 billion for Chelsea football club.
Cuban has been a prolific startup investor outside of the Mavericks and has made more than 500 investments, according to Pitchbook data, as well as founding other companies including AXS TV and Mark Cuban Cost Plus Drugs.
(Updates with potential tax implications in 6th paragraph)
By Tom Maloney
