|Even before he hears the entire question—So, what did your friends and family say about buying the 76ers?—Blitzer spits out his answer: “Are you guys crazy?”
Harris heard the exact same thing from others.
“I talked to a lot of people about it and they said, ‘Are you crazy? You don’t need to do this’” Harris recalls. “And it’s true. Philly fans are well-known as being very passionate.”
By the way Harris says the word passionate, you can tell he’s referring to the love-hate relationship Philadelphia sports fans are notorious for having with their local teams’ players, coaches—and owners. They’ll love you when you win, but they hold you very much accountable if you lose. How he would handle that criticism was certainly a concern.
“I wouldn’t say I was surprised, because I know he likes to take on big challenges and he has incredible stamina,” says Dan Schlager C’86, one of Harris’ old fraternity buddies. “I was more just concerned about whatever negative comments come with being in the public eye.”
There were other concerns, too. For one, the Sixers have not had a winning season since 2004-05, and their average attendance dipped from around 20,000 per game in 2000-01 (when they went to the NBA championship) to under 15,000 last year, one of the lowest in the league. And the outlook for the NBA itself wasn’t too promising, either, with the league’s owners bickering with players over the division of revenue and other issues, which led to a work stoppage that lasted until December and delayed the start of the season.
But as the co-founder of Apollo Global Management, a publicly traded firm that invests in distressed properties, Harris has a history of turning around troubled assets. And he’s always been smart about it, helping transform Apollo from what was once “10 people in a room” into a giant in the investment industry, while achieving the kind of personal wealth he never dreamed possible. In Forbes’ 2011 billionaire rankings, Harris was reported to have a net worth of $1.5 billion.
“People that really know Josh know he’s a thoughtful investor,” says Ignaczak, the president of the private equity firm Quad-C and one of Harris’ best friends since college. “He only gets involved with things he thinks he can have an impact on and be successful at. So I don’t think there was much skepticism among his friends and the people that know him well.”
Like Harris, Blitzer, who serves as co-managing owner, established a successful career in private equity, getting a job at the investment-and-advisory firm Blackstone right after graduating magna cum laude from Wharton in 1991. He’s remained there ever since. “I was ready to go to Penn if they would take me, and I was ready to go Blackstone if they would take me,” he said. “And they both did.”
It was while working in London a couple of years ago—where he established Blackstone’s corporate private-equity investment efforts in Europe—that Blitzer remembers sitting with Harris in an English pub and first talking about buying the Sixers. At the time, it was more of a hypothetical based on his own love for basketball and some rumblings that he’d heard that the team could be on the market. But about a year later, when they found out Comcast-Spectacor was hiring a banker and indeed putting the Sixers up for sale, hypothetical turned into reality.
“It went from a funny conversation in a bar to, ‘They’re really selling this team, and we can really do this,’” Blitzer says.
Blitzer admits Comcast-Spectacor—which also owns the NHL’s Philadelphia Flyers and the Wells Fargo Center—was originally skeptical that a group of private investors led by him and Harris would be able to meet their demands on price. Carving out the 76ers from the rest of Comcast-Spectacor’s entities was also a difficult process that “took significant amounts of time, detail, and focus from everybody,” Blitzer says. But after long and grueling negotiations, the Harris/Blitzer group signed the deal for a reported $280 million early last summer. After completing another long process to get NBA approval, the transaction closed in mid-October, with the NBA lockout in full swing.
“That was a very important issue that added complexity to the whole thing,” Harris says of the lockout. “It wasn’t good, but we factored it into our thinking as to how we created the deal.”
Perhaps the smoothest part of the acquisition was how easy it was to find fellow investors. Initially, Harris brought along one of his best friends from Penn in Wrubel, while Blitzer brought along sports agent Jason Levien. Leder—who graduated from Penn three years before Harris but later got to know him through his friend and Apollo co-founder Marc Rowan W’84 WG’85—told Harris he would like to coinvest as soon as he read about the possible sale in the papers. Other investors flocked in, too, and by the time the sale was finalized, the group included, among others, GSI Commerce CEO Michael Rubin, and Philly-born Hollywood star Will Smith.
“We didn’t ever have to solicit any investors,” Harris says. “They literally came to us.”
Each investor, of course, had his own reason for wanting to buy a stake of the team. But, it seems, there was one motive that linked them all: the confidence they had in Harris, a man who’s never backed down from a challenge.
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| ©2012 The Pennsylvania
Last modified 02/23/12