April 8 (Bloomberg) -- Tom Gores, founder of California-based Platinum Equity, has a tentative agreement to buy the Detroit Pistons from current owner Karen Davidson, the two sides said today in a news release.
The purchase, which must be approved by the National Basketball Association, includes the Pistons, the Palace of Auburn Hills and DTE Energy Music Theatre.
Financial terms weren’t disclosed in a press release distributed by Marketwire. In February, the Detroit Free Press reported that Gores would buy the team from Davidson for $420 million. Gores’s acquisition will be financed by Comerica Bank and is expected to close by June 30, pending league approval and normal conditions, according to the release.
“Just as my late husband, Bill Davidson, was the face of the Pistons, I am confident that Tom will bring the same energy, dedication and love to this organization,” Karen Davidson said in the release.
The 46-year-old Gores is a Flint, Michigan, area native and Michigan State University graduate. He is the founder and chairman of Platinum Equity, a Beverly Hills, California-based private equity investment firm that owns 34 companies in a range of industries, including technology, industrials and automotive supply.
The NBA and its player’s union are preparing for offseason labor negotiations. The league’s collective bargaining agreement expires on June 30 and the two sides disagree on issues such as minimum age requirements, the percentage of shared revenue and salary cap restrictions.
In an interview for Bloomberg Television’s “Conversations With Judy Woodruff,” NBA Commissioner David Stern said in February that the league has projected losses of about $350 million this season. He has said the owners want to reduce player salaries by as much as $800 million annually.
The Pistons have made the playoffs eight of the last 10 seasons and have won three NBA titles, most recently in 2004. The team is 27-51 this season, 31 games behind the Chicago Bulls in the Eastern Conference’s Central division, and failed to reach the postseason.
Last year Mike Ilitch, owner of hockey’s Detroit Red Wings and baseball’s Detroit Tigers, expressed interest in purchasing the Pistons. Talks stalled after Ilitch concluded that revenue numbers in the team’s prospectus were inflated, Forbes reported citing an unidentified person familiar with the negotiations.
The Pistons won 27 games last season, their lowest total since 1993-94. From 2010 to 2011, the team’s value dropped 25 percent, to $360 million from $480 million, according to Forbes Magazine.
The Pistons are the second NBA team to be sold this season. In December the league bought the New Orleans Hornets from George Shinn for an undisclosed price. The Hornets are worth $280 million, making them the fifth-least valuable team in the league, according to Forbes.
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