Then Tuesday' Forbes report came out, which smartly noted that the press release sent out after the transfer of ownership didn't exactly mention that local-boy-gone-rich as the new owner of the Pistons. Rather, it's his investment firm (Platinum Equity) that is taking over.
That's right: The Detroit Pistons are about to become the first major professional sports franchise in North America to be owned by a private equity fund. Not by flesh-and-blood individuals who made their fortunes in private equity (like the Boston Celtics or Golden State Warriors), but by a $2.75 billion financial vehicle. What that means is that this the Pistons are about to become an investment, not a labor of love. Something bought for the purpose of later being sold, not to keep in the Michigan-loving family for generations.
The NBA is obviously aware of this reality — my understanding is that Platinum has fully explained to league officials how PE funds operate — and apparently is okay with it.
Yes, it's true that Gores will invest personal money into the deal. But it's also true that Gores invests personal money alongside all Platinum Equity deals, by virtue of its partnership agreement. Don't recall any "hometown hero" stories when Platinum acquired fastening systems manufacturer Acument Global Technologies, which happens to be headquartered in Sterling Heights, Michigan.
Great. So the Pistons are in yet another holding pattern, likely to be stripped down, or at the very best (as Forbes puts it) a "loss leader" to point the IRS at while Platinum Equity makes money off of the other interests (namely, the Palace of Auburn Hills) included in the deal.
Of course, the Pistons could also make money by spending money wisely on the right players and coaches, but that's never a guarantee, even once all the right moves are clicked off, in an NBA world with injuries and out-and-out bad luck. And "never a guarantee" never really flies in the world of private equity funds.
It appears as if the waiting game isn't over, Detroit. You've got yet another owner, as was the case following Bill Davidson's passing, that regarded the Pistons as an asset, rather than a potential champion to pour over.
- Platinum Equity
- Tom Gores