Timberwolves owner Glen Taylor, in a court filing last week, responded to a lawsuit brought by minority owner Meyer Orbach alleging Taylor violated Orbach's so-called tag-along rights to sell his shares of the franchise before Alex Rodriguez and Marc Lore take control of the team.
Taylor argues in the filing Orbach is not entitled to a payment for his shares until Rodriguez and Lore assume majority control of the team, which would be in about two years.
Taylor, who also owns the Star Tribune, said currently Rodriguez and Lore have three different options of purchasing larger stakes of the franchise after purchasing 20% this year. Each option would require NBA approval, and would result in Rodriguez and Lore purchasing an additional 20% in each of 2022, 2023 and 2024. Taylor argues that until Rodriguez and Lore actually exercise their options to take majority control, no tag-along rights are being violated.
Also, Taylor argues that the partnership agreement says he must decline to exercise "drag-along" for other partners to be bought out on the same economic terms as Taylor before any other owner can exercise their tag-along rights. In the filing, it appears the drag-along rights will be enacted once Rodriguez and Lore assume a total of 60% of the franchise by the end of 2023.
Orbach, who initially bought a 5% ownership stake in the Timberwolves in 2016, claims that his company, Orbit, is now the largest limited partner with Taylor and owns 17% of the franchise.
According to his original claim, Orbach, who is a New Jersey real estate investor, claimed Taylor ignored his request to exercise his tag-along rights, which he claims are contractually obligated. Those rights would allow Orbach to sell his interest in the team before Taylor can execute the sale of the franchises to Lore and Rodriguez.
Orbach's point of contention is that while Taylor has said controlling interest of the franchise will be given to Lore and Rodriguez over time — ostensibly letting them transition into NBA ownership — that doesn't change the fact that the controlling stake in the team is starting to change hands now and, contractually, Orbach's tag-along rights should be executable before that happens. Taylor is alleging an agreement and the actual sale of the team are two different things and Rodriguez's and Lore's different options to buy increasing shares does not allow Orbach to exercise his tag-along rights now.
Rodriguez and Lore plan to buy 20% of the franchise in 2021, according to filings.
Orbach's initial filing included a claim that Taylor did not include a provision preventing Lore and Rodriguez from moving the team, but any such provision likely would be difficult to uphold in court.