Cavaliers sold for $375 million to founder of Quicken Loans
By TOM WITHERS
The Associated Press
1/3/2005, 12:30 p.m. ET
CLEVELAND (AP) — The Cleveland Cavaliers were bought Monday for $375 million by the founder of the nation's largest online mortgage company, who acquires a team that has surged from the NBA's depths since the arrival of LeBron James.
Dan Gilbert of Detroit, founder of Quicken Loans, will assume ownership of the Cavaliers and operational control of 20,000-seat Gund Arena once the league's Board of Governors approves the deal.
Former owner Gordon Gund will maintain a minority stake of no more than 10 percent, a source with knowledge of the terms of the sale told The Associated Press on condition of anonymity. The amount of cash changing hands will be further reduced by Gilbert's assumption of debt, the source said.
Gund and his brother George bought the team from Ted Stepien in 1983 for $20 million.
"It's been a long, long dream," said Gilbert, who first approached Gund three months ago about acquiring the Cavaliers.
Because of strict NBA rules, Gilbert was not allowed to speak about any of the Cavaliers players or front office personnel, but he said that owning a team with James on it added to the allure.
"This one has a lot of sizzle and attention to it," he said.
The Cavaliers are the fourth NBA team to be sold in the past year, most recently the Phoenix Suns for $401 million. The other teams were the Atlanta Hawks ($250 million) and New Jersey Nets ($300 million).
Gilbert said he has no plans to relocate the Cavaliers, a possibility that had made Cleveland fans nervous when they heard Gund was selling the team.
"We will not be moving the Cleveland Cavaliers," Gilbert said. "They will be staying put in downtown Cleveland — right where they belong."
Gund released a statement confirming his agreement with Gilbert, who will take over day-to-day operations of the franchise.
"I am pleased that I will still be involved in this way because I have great confidence in him and also because I have great confidence in the future of both the Cleveland Cavaliers and Gund Arena," Gund said of maintaining his minority ownership stake.
The 42-year-old Gilbert, who failed in an attempt to buy the Milwaukee Brewers last year, is getting the Cavaliers with their value and visibility higher than at any other time in the team's 35-year history.
James, the club's second-year star and the league's reigning rookie of the year, has put Cleveland back on the pro basketball map. The Cavaliers' once-sagging season-ticket base continues to grow and could see another substantial jump if the team — currently leading the Central Division — gets back to the playoffs for the first time since 1998.
Gilbert, who hopes the league will approve the sale before the end of the regular season, has visited Cleveland several times over the past month to learn all he can about the organization.
His attention to detail impressed Cleveland coach Paul Silas.
"We talked and I gave him my input as to where I thought the team was and where we can get to in time," Silas said in Charlotte, N.C. "It was a good conversation. It's difficult to assess in just that one meeting, but he asked some good and tough questions. That shows that they have been thinking about this thing for a long time."
In buying the Cavaliers, Gilbert has satisfied a sports craving that dates to his first job out of college as a TV sports broadcaster.
He was once believed to be the front-runner to land the Brewers. He was eventually outbid but that didn't sour his taste for sports. One of his companies, Rock Financial, a subsidiary of Quicken Loans, is one of the Detroit Pistons' major sponsors.
Gilbert was in his first year of law school at Wayne State when he invested $5,000 — his life savings — to launch the online mortgage business Rock Financial. In 1998, he sold the company for $370 million only to buy it back four years later. According to Forbes, Rock Financial closed mortgages totaling more than $12 billion last year. Quicken Loans was named America's 13th-best company to work for by Fortune magazine in 2004.
