There are signs the Knicks are for sale, but a unique problem could hold up an ownership change and make it hard for a buyer to find enough money

Richard Drew/AP

In recent months there have been increased rumors about James Dolan selling the New York Knicks.
The Knicks are valued at $4 billion by Forbes, and it is that league-leading price that could make a sale complicated.
ESPN’s Zach Lowe explained on a podcast that few people could pay for the team outright, and that a group of people who could be in the running may not want to borrow money or finance the purchase.
An ownership group may be needed to meet a price like $4 billion, but for minority owners to own 1% of the team might not be worth it.

In recent months, there have been an increasing numbers of rumors about whether Madison Square Garden CEO and executive chairman James Dolan would sell the New York Knicks.

It began in December when in an interview with ESPN’s Ian O’Connor, Dolan said he had received "feelers" for the Knicks, not bona fide offers, around $5 billion. He said he had no plans to sell the team, but as a public company, he could not rule it out for the right price.

In February, The Ringer’s Bill Simmons reported that Dolan is "courting" offers for the Knicks, saying it’s "go time."

The Madison Square Garden Company denied rumors of a sale following O’Connor’s interview and Simmons’ report.

However, the topic arose again this weekend when Dolan was seen confronting a fan who yelled at him to sell the team. Dolan responded by calling security and telling the fan to enjoy watching the team from home.

The Knicks are 13-54, the worst record in the NBA, amid their fifth straight season with 50 or more losses.

The team’s futility has not affected its value. In February, Forbes estimated the Knicks to be worth $4 billion, tied with the New York Yankees for the second-most valuable franchise in the U.S.

However badly Knicks fans may want Dolan to sell the team, the potential sale may be a bit more complicated than other NBA teams, in part, because of the team’s sky-high valuation.

Kathy Willens/APSimmons reported that Dolan is more interested in the entertainment business than sports business. Dolan put money into a renovation of MSG and The Forum in Los Angeles, another concert venue he owns, and cares about the "in-game" and "in-concert" experience, according to Simmons.

Simmons said a prospective buyer would not get Madison Square Garden in a sale.

The price tag for the Knicks alone, without the arena, could complicate a potential sale.

ESPN’s Zach Lowe said on a podcast with ESPN Knicks reporter Ian Begley that although there had been "smoke" around a potential Knicks sale, he had not heard anything definitive.

He explained what makes buying the Knicks difficult.

If the Knicks were to sell for $4 billion, as Forbes estimated, there is a limited pool of people who could buy them outright. The NBA allows owners or future owners to borrow up to $325 million against their teams. Otherwise, they would need to find other ways of financing. Houston Rockets owner Tilman Fertitta, as Lowe noted, used bonds from his restaurant and casino businesses to buy the Rockets for $2.2 billion in 2018.

The Knicks are estimated to be nearly double the price of the Rockets. Simmons said he heard Dolan wanted $5 billion for the team, though it’s unclear if he would get it.

Lowe said the type of people who could be in the running to buy the Knicks might not want to pursue the avenues of financing it.

"You can only borrow $325 million against your team, via the NBA’s loan facility. Everything else you borrow is, you’re leveraging yourself. You’re exposing yourself. That’s all your personal stuff," Lowe said. "So people, even rich guys, super-duper rich guys, are like, ‘I don’t have enough money to buy the Knicks.’

"And I’m like, ‘Well can’t you just take out a loan … find financing?’ They don’t want, necessarily, to expose themselves in that way."

Lowe said that it might take a situation like in 2014 when Steve Ballmer bought the Los Angeles Clippers outright for $2 billion. There aren’t as many people who could lay out $4 billion out of pocket.

The next step would be for an ownership group to organize a bid. Again, the price is a potential problem. Lowe explained that minority owners who get 1% of the team might not want to lay out $40 million for, well, not much.

"When you own 1% of the team, you know what you get? Nothing," Lowe said. "You get some seats at some games. You might not even get to sit courtside at MSG if you own 1%. You don’t get to go to Board of Governors meetings. You don’t get to sit in on trade calls. You don’t get to be in the draft war room. You get nothing. You get to sell that 1% at some point for more than it’s worth."

Begley called being a 1% owner of the Knicks a "vanity" move — it’s symbolic of wealth, but may not come with many perks.

The timing of the sale rumors has raised eyebrows. The Knicks have cap space this summer and are believed to be in the running to land big free agents like Kevin Durant and Kyrie Irving. They also are poised to land a top-five pick, and perhaps even the No. 1 pick, which would be Zion Williamson.

Why would Dolan consider selling the Knicks with a potentially bright future ahead? Lowe noted two possible theories: perhaps incoming superstars want to play under different ownership and have made it known. Dolan told ESPN he has a responsibility to shareholders, so it may be in the best interest of the company to sell if it means landing a star player or two.

However, Lowe also said some people in the NBA world believe that star players also like stable ownership situations. Perhaps the "smoke" Lowe had heard was leaked by people who want to hurt the Knicks’ free agency chances. Lowe said there are large factions of people who don’t believe a sale will truly happen.

Lowe said he believed that potential buyers were given notice to "organize." It may not have come from Dolan himself or his group, but Dolan’s comments to ESPN may have been a suggestion that he would listen to formal offers.

A sale seems far from imminent, and if Simmons’ report about Dolan wanting to hold onto the arena and the entertainment side of the business is accurate, there may be major logistics to work out.

For fans hoping for a new team owner next season, it seems like a long shot that a sale could come together so quickly.

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