Isaac
Last year

Kestelman looking to sell majority of United stake

His first order of business is to sell the majority of his Melbourne United team, he reveals to The Australian Financial Review.

The club recently won the NBL championship in a thrilling five-game finals series against the Adelaide 36ers. Kestelman wants several buyers to take majority control in transactions that he believes could value United about $10 million.
United's triumph, Kestelman believes, makes it the right time for him to relinquish majority control and step down from the team he purchased six years ago when it was then known as the Melbourne Tigers. It will also help head off some whispers regarding a conflict of interest of an individual owning the league as well as its best team.

To that end, Kestelman also claims he will be able to sell the Brisbane Bullets - also under his control since returning to the NBL two years ago – in the off-season as well.

But Melbourne United, which attracted regular crowds of 10,000 during the last season, is the much more attractive commercial proposition for now, says Kestelman, who wants to sell down about 70-80 per cent of the club and remain as a passive investor.
Says he's spent tens of millions on the NBL.

For story on the AFR site.

Topic #43061 | Report this topic


Anonymous  
Last year

LK doing the right thing. Can't see how you can’t respect this guy. He’s done a lot for basketball in Australia.

Reply #682913 | Report this post


Udog  
Last year

Very convenient title should help the sale along.

Reply #682918 | Report this post


ME  
Last year

"Very convenient title should help the sale along."

What a stupid comment. Of course he's going to sell the club when the club can actually be sold.

Reply #682922 | Report this post


Zodiac  
Last year

Boti said in a post recently that LK has spent $30+ million on the NBL.

I hope without the connection to Tigers/United LK still continues to invest in the league as he's done an outstanding job thus far.

Reply #682924 | Report this post


PeterJohn  
Last year

Some interesting info regarding the TV package they're trying to sell. Packaging the NBL coverage with the 2 Boomers vs USA games is a clever idea.

Also interesting to see the mention of a 43% increase in "cumulative TV audience" for this season over last. Would that be the addition of the SBS and ABC coverage? Were they both additions this season?

BTW, the Foxtel ratings for Game 5 of the GF series were 49,000. Another good figure after the 53,000 for game 2 I think. So the cumulative number for Foxtel across the 5 games would be over 200,000. I don't know what SBS and ABC got but I expect it would be of the same order. Add in NBL TV and you'd be approaching half a million across the five games.

Reply #682928 | Report this post


skull  
Last year

LK = Legend

Reply #682947 | Report this post


Anonymous  
Last year

I'd love to see LK sell United and step away from the league, and then see how the salty Sixer supporters feel in 2-3 years time.. lol

Reply #682952 | Report this post


Anonymous  
Last year

^ they would still complain about playing SEABL on steroids.

Reply #682953 | Report this post


LoveBroker  
Last year

Very convenient title should help the sale along.


Yes....it's called being shrewd.

I take it, goes against your buy high sell low investment strategies?

Reply #682958 | Report this post


Anonymous  
Last year

nah ... i'm all for it, got my V8 commodore for $200 off gum-tree last year , now that I've put almost roadworthy tyres on it and registered it , its worth $400 ..... now thats a 200% profit ! Eat that LK !

Reply #682960 | Report this post


KET  
Last year

It's a smart time to sell United with strength success and potential.

I’m a little concerned if LK has spent $30million - how long does that kind of spending cut it as a wing of his company for tax writeoff purposes?

Reply #682961 | Report this post


Anonymous  
Last year

No mate if you sell your shitty commodore for $400 (after paying too much for it in the first place)and then spending money of RW tyres you actually haven't even sold it yet. You can't extrapolate that into a 200% profit either, cos even without the tyres it's still only 100% profit on a turd.

Reply #682963 | Report this post


Zodiac  
Last year

I need to slightly correct myself Boti said "close to" $30 million.

On May 28, 2015, Larry Kestelman's initial $6million commitment to save and restore the NBL to previous prominence and then beyond, was revealed nationwide.

(By now the league’s "executive director" has put in close to five times that amount.)


http://www.botinagy.com/blog/why-cant-we-get-along-ii/

Reply #682967 | Report this post


Anonymous  
Last year

Anonymous
Within the hour
21:03 8 Apr 18

hey Hey HEY !, no need to be aggressive and un-hip - , can i get the hook back - I think you took it along with the bait and all :(

PS: you forgot to count the $750 rego cost, so its actually a four figue loss in total - but then you are anonymous lol

Reply #682972 | Report this post


Isaac  
Last year

I wonder if this is the knife edge. Could quite feasibly go one of two ways:

1. He sells which removes the governance concern, an AFL club buys in with Bogut, the co-opted Boomers/NBA TV deal underpins all NBL clubs long enough for them to galvanise and take the next step league-wide.

2. He's overspent more than he expected he'd need to, the Melbourne sale doesn't go quite as hoped, the Brisbane sale not at all, winning a championship deadens some level of his interest, the league continues to struggle in a competitive media/sponsorship landscape. Drop the spending, and they're overwhelmed on many sides - broadcast/personalities, 3x3, merchandise, etc - that sort of stuff can't be maintained on the cheap with the polish they've put in.

Unfortunately, the linchpin is probably the United championship and it can exert pressure on either side of the knife. Gives him confidence to sell, or gives him an excuse to bail.

This has always been the risk. Hopefully it pays off.

Reply #682978 | Report this post


Anonymous  
Last year

BUT WHAT ABOUT THE MEMERS COMPLAINING ABOUT OMG LK ONLY WANTS HIS OWN CLUB TO WIN WTF RIGGED NBL!!

It's almost like he actually is trying to rebuild the league into the powerhouse it once was.

Reply #682979 | Report this post


Anonymous  
Last year

1. He has spent a shit load, to pull out now would be dumb business going by the numbers thrown around.
2. They just invested In 3 x3
3. His "SON" just launched first ever clothing apparel...

This dude isn't going anywhere in a hurry

Reply #682981 | Report this post


Jack Toft  
Last year

he believes could value United about $10 million.


Tell him he's dreaming.

When it comes to business valuation, there are a number of ways to do it, but at the end of the day, the old "bank interest rule" applied. ie if you had $10M in your bank account, what interest would you get. For $10M, you could probably get 5% in a term deposit, more other ways, but what profit did United make last FY?

A 5% return is a $500,000 profit before tax. Did United make that much?

Reply #682986 | Report this post


proud  
Last year

I wish I could win a big lotto and then I could fathom how much $30m is... I could even buy that V8 commodore that was advertised on here

Reply #682995 | Report this post


Isaac  
Last year

1. He has spent a shit load, to pull out now would be dumb business going by the numbers thrown around.
Sunk cost fallacy probably enters the discussion at that point.

Reply #683000 | Report this post


Bol  
Last year

Jack Toft, please tell me where you can get 5% interest on term deposit, I'd love to invest

Reply #683002 | Report this post


Udog  
Last year

Bet he thought he could do this a few years ago but things weren't going to plan. Probably why the soft cap/ fund redistribution was shelved. Build up United with an unfair advantage then sell when they're on top. The fund redistribution would have helped out too many other teams.

Reply #683007 | Report this post


FM  
Last year

A lot of people getting around with big loads of money looking for something else to do besides running their business.

You don't by a Basketball team because you want to make profit. You buy it because you can. If you looked at professional team owners around the world the far majority are a couple of rich people who want to own and follow something or x-players who still stay attached to the sport directly.

I like basketball, I like it a lot. However I don't have a few spare mil sitting around, hence I am not a NBL owner. However if I had a business which could allow me to blow 5mil a year on whatever luxury I could have, then I would buy a team.

Reply #683009 | Report this post


WookieE  
Last year

Larry keeps his stake in United = people bitch and moan

Larry wants to sell his stake in United = people bitch and moan

Can't please all the people all the time...

I can definitely see where you're coming from with the knife edge, Isaac, and I'm usually a glass half empty sort of person, but you'd think that after everything LK has sunk in and the effort he's putting in still, that he's got at least another season in him, especially if he can sell his stake in United and remove the conflict of interest with them (I think the league being in control of the Bullets is a different kettle of fish, as without them that would mean no Bullets) then that will open up the door for expansion...

He's doing the right thing and I hope it all works out... Putting a public number on it could be dangerous, and I agree that his ability to sell United could be the key to whether he stays and commits more time and money, or he pulls the plug...

Reply #683013 | Report this post


Reality  
Last year

Cash out at the right time!

THen build up Brisbane for a sale in 12/18 months time whilst still owning the league all the assets play in!

Its like being the landlord of the only apartments in town the assets are really only worth what the owner says they are!

If Hawks plus 1 other franchise come in the league itself will be worth alot of money and generate good revenues via league wide sponsorship thus LK could sell it back to the clubs are keep it as a private investment.

Reply #683019 | Report this post


Luuuc  
Last year

Note that he says "I am looking for some savvy business people to buy 5% each" - so he's not expecting some individual to drop 10 mil.

He also says about United "We have got it to the stage where it is a break-even proposition" - which to me is a slight worry considering their great crowds and success this season.

Reply #683022 | Report this post


Isaac  
Last year

Quote from LK in that article about the profitability of Melbourne:

"I am looking for some savvy business people to buy 5 per cent each of the team, so we can have a good collection of people that know business and think about this as a business proposition as well. We have got it to the stage where [it] is a break-even proposition and I think those that come in will be able to take it to the next level and have a profitable team that ends up being a good investment for them as well."
My emphasis.

The NBL expenses recently would have dwarfed those of Melbourne. Not much of what he's doing will have been cheap.

Reply #683023 | Report this post


Yo Yo  
Last year

LK will gain all his NBL loses back on the Boomers games

50,000 people by 2 games at a net average of $100 per ticket is $10,000,000

TV rights would be in the $10,000,000 range

Reply #683027 | Report this post


jodiechrist  
Last year

Uh, I doubt that very much, particularly if packaging at a loss to secure NBL season coverage.

Reply #683057 | Report this post


Tim  
Last year

Sounds like smart business moves to me. Get out of areas of basketball that are unprofitable (ie. Owning teams), move into areas that are (Selling gear to kids through kmart).

Reply #683058 | Report this post


Isaac  
Last year

Uh, I doubt that very much, particularly if packaging at a loss to secure NBL season coverage.
Remains to be seen how it will play out, but I know of people (of not extravagant means) who were booking $1k/seat packages the day the Boomers-USA games were announced.

I'd guess there are more "OMGLEBRON" NBA aficionados in Australia than NBL fans by some measure. Anything could happen with those games.

Reply #683061 | Report this post


LV  
Last year

I'd also be interested to see the calculations and find out how the $10 million figure was arrived at.

Business valuations differ depending on industry and a variety of factors, but typically there's some kind of "Times earnings" approach somewhere.

As stated above, if they aren't making a profit then really- what are they worth?

If you had $30 million in the bank, would you spend $10 million buying a business that was just breaking even?

Look, I don't want to sound pessimistic but the reality is sports rely on people like LK who are doing it for the love.

Most AFL clubs make profits- but often this is due to other business interests such as pokies.

Most NRL clubs lose money. Most A League clubs lose money.

I'm just hoping LK stays on for as long as possible.

Reply #683068 | Report this post


Cram  
Last year

Definitely smart by LK to try to sell high, but if anyone pays anything near 10 million for United they must be the ones that are high.

Even the hypothetical invetors buying 5%; 500k for 1/20th of an NBL team would rank as one of the worst investments of all time.

Reply #683077 | Report this post


Isaac  
Last year

I think it'd be crazy to buy in now too. But Melbourne is big and (at present) has one NBL team. Maybe the intersection of basketball and Melbourne is a reasonable enough size that you're bound to get wealthy and keen people who aren't very fussy about $500k.

Reply #683079 | Report this post


Cram  
Last year

Maybe. But in the past 500k entry would give you a great deal more than 1/20th of a club, and with the history of the league, would you put that kind of cash into something that you could potentially have no real control over? I can understand someone putting up a mill or 2 or even a bit more to run a basketball club for fun, but ad valued, that wouldn't get you close to a controlling share, and I'd think thats a big sticking point

Reply #683088 | Report this post


Manu Fieldel  
Last year

Hell, if he were willing to give it away for half that I'd be interested. They're going to be the benchmark team in the league for the foreseeable future and will become profitable

Reply #683089 | Report this post


SteveK2  
Last year

Investor is probably not the most accurate description. Most people that can entertain buying a sports club are usually savvy enough to know that there is almost no ROI. At best its a tax offset.

Are there enough buyers in Oz?

Reply #683090 | Report this post


Manu Fieldel  
Last year

Cairns and Perth are two I know of that turn a profit

Reply #683100 | Report this post


Cram  
Last year

Not being profitable is fine for a couple of wealthy investers who want their own club. But for someone wanting to buy a 5% stake? Again, you're not going to have control.

What happens when the rest of the investors start making decisions that make a decent tax loss into something worse? What happens when a few investors go broke/ opt out and more can't be found?

If you have a controlling interest these issues aren't as big of a risk, but puttingg half a mill of your cash into the hands of others makes it a much bigger risk

Reply #683101 | Report this post


Anonymous  
Last year

The Kings people are unhappy with their hands in the pockets all the time. Maybe they should sell for $8mill.

Reply #683124 | Report this post


Anonymous  
Last year

I bid 2 shillings for the Bullets.

Reply #683134 | Report this post


Anonymous  
Last year

"LK doing the right thing. Can't see how you can't respect this guy."
So this would be one of the same posters who swore that LK was no longer involved in Melbourne.

LK "doing the right thing" would have been divesting his Melbourne interest before taking over the league.

Reply #683282 | Report this post


ME  
Last year

"
LK "doing the right thing" would have been divesting his Melbourne interest before taking over the league.

"

Oh, you mean back when no one would have bought it because there may not have been a league the season after?

Fantastic idea!

Reply #683283 | Report this post


Anonymous  
Last year

Let's hope his real estate business is going gang busters.
Prahan Isn't it?

Reply #683287 | Report this post




 

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