The Minnesota Timberwolves reportedly traded Karl-Anthony Towns to preserve their roster depth. Jon Krawczynski of the Athletic stated on September 28th that keeping Towns on the roster increased the likelihood of Minnesota having to part ways with Naz Reid and Nickeil Alexander-Walker.
Keeping him on the roster likely would have meant saying goodbye to Reid, who won NBA Sixth Man of the Year last season and is wildly popular in Minnesota, and likely Alexander-Walker as well, team sources said.
The Timberwolves’ Sale Agreement
Although Jon Krawczynski is correct, Karl-Anthony Towns was traded due to an off-the-court legal dispute. Timberwolves owner Glen Taylor agreed to sell the team an ownership group led by Marc Lore and Alex Rodriguez for $1.5 billion on May 13th, 2021.
The agreement stipulated that Taylor would oversee the team for two more seasons before handing over control to the new ownership group.
Taylor, 80, a lifelong Minnesotan who bought the Timberwolves in 1994 for $88 million to save them from moving to New Orleans, has said he will continue to run the club for two more seasons until a handover in 2023.
The Timberwolves’ Sale Dispute
However, the ownership change didn’t occur as Taylor claimed that the ownership group led by Lore and Rodriguez had yet to pay the agreed amount of money before the March 27th, 2024 deadline. According to ESPN, the ownership could not pay the final $600 million to close the sale.
The group made the first two payments in 2022 and 2023, getting ownership of about 36% of the team, and announced they’d filed paperwork to buy an additional 40% for about $600 million that could gain them control of the franchise by the end of March. The two negotiated with numerous potential partners and several private equity groups in the months leading up to the deadline as they searched for ways to raise capital, sources told ESPN.
Lore and Rodriguez claimed that they submitted commitment letters for the $600 million and pointed to language in the contract that they were eligible for a 90-day extension
Glen Taylor’s concern about payroll
If this is true, why would Taylor refuse to give them an extension? Well, the answer is that they were planning to cut payroll. ESPN reported on April 10th that the ownership wanted to lower payroll to $171 million for the 2024-25 season.
In documents shared with Taylor, the NBA and The Carlyle Group, a private equity firm, Lore and Rodriguez rendered a budget projection as potential majority owners that would’ve lowered the Timberwolves’ payroll to $171 million beginning next season — below the projected $172 million luxury tax threshold, sources told ESPN. The Timberwolves would’ve gone from approximately a $25 million-plus tax payment to a team receiving a tax distribution of approximately $6.5 million.
Consequently, the team would have reduced payroll by 27.3 million, as the salary cap was $198.4 million during the 2023-24 season. Before this report, Taylor alluded to his displeasure with the new ownership group’s plans on March 28th.
“We went through the process, and I spent a lot of time. We’ve got a really good team, we’ve got a lot of good things going for us, I enjoy it and I’m healthy enough to do this,” Taylor said in an interview with The Associated Press after the announcement. “I don’t need the money, so I think I’ll just keep running it and enjoy it. I like my coach. I like my staff. This way everybody gets to keep their jobs, and I’ll be happy.”
The Timberwolves’ Arbitration Hearing
Taylor’s action led the new ownership group to request an arbitration hearing to resolve this dispute. The hearing is scheduled for November 4th, and a decision will be made within 30 days.
Consequently, it is no coincidence that Karl-Anthony Towns got traded a month before the hearing, as the organization is preparing for the possibility of new ownership. A day after the trade, ESPN reported that the new ownership group had confidence in winning the hearing.
“After the discovery process over the summer, Lore’s group has grown confident it will win and has gotten all of its finances in order, sources said,” Windhorst wrote. “They plan to arrive at the proceeding with more than $900 million in escrow with the backing of billionaires Eric Schmidt, the former CEO of Google, and former New York City Mayor Michael Bloomberg.”
If the new ownership group wins the hearing, they’ll continue with the plan to cut payroll. Furthermore, there was no indication that the payroll cuts were only for one season. As a result, the team could lose rotation players over multiple seasons.
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