A minority partner of the Timberwolves and Lynx filed suit Wednesday, alleging breach of contract by majority owner Glen Taylor in the proposed sale of the teams.
The lawsuit, filed in the District Court of Minnesota by Meyer Orbach, also said there was no stipulation in the proposed $1.5 billion sale of the franchises to Marc Lore and Alex Rodriguez that would keep the Timberwolves in Minnesota.
Orbach, who initially bought a 5% ownership stake in the Timberwolves in 2016, claims that his company, Orbit, is now the largest limited partner with Taylor and owns 17% of the franchise — more than all other minority partners combined.
According to the suit, Orbach, who is a New Jersey real estate investor, says he has been ignored by Taylor in his requests to exercise his tag-along rights, which he claims are contractually obligated. Those rights would allow Orbach to sell his interest in the team before Taylor can execute the sale of the franchises to Lore and Rodriguez. And Orbach is seeking a court order to make sure the sale doesn't occur until those rights are honored.
Taylor issued a statement on Thursday that read, in part: "As a policy, we do not comment on pending legal matters. I stand by my prior statements and commitment to keeping the Timberwolves and Lynx in Minnesota."
While the sale might feel like an all-or-nothing proposition, Taylor's negotiations with Lore and Rodriguez are only for Taylor's ownership stake.
Orbach's main point of contention is that while Taylor has said controlling interest of the franchise will be given to Lore and Rodriguez over time — ostensibly letting them transition into NBA ownership — that doesn't change the fact that the controlling stake in the team is starting to change hands right now and, contractually, Orbach's tag-along rights should be executable before that happens.
The suit alleges Taylor has agreed to transfer complete ownership to Lore and Rodriguez by Jan. 1, 2024 — but ownership could happen earlier, and the decision to transfer ownership sooner would be solely decided by Lore and Rodriguez, who plan to buy 20% of the franchise in 2021.
Orbach, in the suit, contends Taylor, who also owns the Star Tribune, has misled the public and the media about his ability to make any potential new ownership group keep the Timberwolves and Lynx in Minneapolis through building that language into the equity interest purchase agreement [EIPA].
"The truth is that Taylor's agreement with Rodriguez and Lore does not, in fact, require them to keep the Timberwolves in Minnesota," the suit contends.
It goes on to allege that the EIPA Taylor entered into with Lore and Rodriguez creates an advisory board and that, "the EIPA requires the Buyer, if it becomes the General Partner, to present the issue to the Advisory Board before moving the team, but it does not require the Buyer to keep the franchises in Minnesota, and the Advisory Board cannot stop the new General Partner from moving the teams."
The legality of trying to build language into the contract that would require the new owners to keep the franchises in Minnesota has been in question since Taylor announced his plans to sell his ownership stake in 2020.
Legal scholars told the Star Tribune last year that even if that kind of language was in the contract, the NBA would have to agree to it.
"You could have some contingencies … and I'm sure there could be a provision that relates to keeping the team in place," said Eldon Ham, an author and professor of sports law at Chicago-Kent College of Law. "But I don't think it would be able to extend forever."
Taylor has made several public comments that the sale to Lore and Rodriguez would be contingent on the Timberwolves staying in Minnesota.
"They will keep the team here, yes. We will put it in the agreement," Taylor told the Star Tribune in April. "At this point we have a letter of intent, but when we make up the contract we'll put that in there. That's no problem. That won't be a problem."
Sources have told the Star Tribune that throughout the sale process Lore and Rodriguez have never given any indication that they plan to move the team.
The fallout between Orbach and Taylor comes after the two had seemingly worked well together since Orbach bought his stake in 2016.
In 2019, when Chinese investor Lizhang Jiang sold his 5% ownership stake, Taylor told the Star Tribune's Sid Hartman that Orbach would be his first point of contact if he decided to sell additional shares.
The next step for the proposed sale would be approval, this summer, from the NBA Board of Governors.
