Glen Taylor's sale of 20% of his ownership in the Timberwolves and Lynx franchises to Marc Lore and Alex Rodriguez is legal and can continue, according to district court judge Eric C. Tostrud, who made his ruling Thursday morning.
"I just would say that hopefully now this clears the way so we can complete our agreement with Marc and Alex," Taylor said.
Tostrud heard arguments on Wednesday from lawyers for Taylor, who also owns the Star Tribune, and franchise minority owner Meyer Orbach, who asked for an injunction against the sale. Orbach argued that the initial 20% sale was the beginning of a control sale process, and that he had rights to sell his minority ownership stake if that were the case.
"We were absolutely confident the entire time," said Greg Jackson, chief legal officer at Taylor Corporation.
Orbach's lawyers have not yet responded to a request for comment.
The judge ruled that the initial sale of 20% was nothing more than that, and not the first step in the sale of the franchise.
"The outcome of these motions largely comes down to one question: whether the sale set to occur on June 30 counts as a 'Control Sale' under the Parties' written Partnership Agreement," Tostrud wrote, before concluding, "it does not."
Under terms of the agreement among Taylor, Lore and Rodriguez, the new owners will purchase an initial 20% stake in the franchise now, 20% by the end of 2022 and 20% by the end of 2023.
That purchase of the third 20% stake, known in the agreement as the "second tranche", would make Lore and Rodriguez, who are equal partners in the deal, controlling owners of the Wolves and Lynx.
Each purchase will require NBA approval and the sides could be meeting with the league in coming weeks to discuss that initial purchase. Taylor argued that until the 2023 part of the sale is complete, he is still controlling owner and at that point he will exercise his "drag-along" rights and force minority owners to sell their stakes.
That is when Orbach will get paid for his approximately 16% share, which he said in the court documents is worth about $300 million. Rodriguez and Lore would also have an option to purchase another 20% stake before the end of 2024.
"As of June 30, there will be no definitive agreement to transfer a controlling interest in the teams to Rodriguez and Lore," Tostrud's ruling continued. "This conclusion undermines the remaining arguments Orbit [Orbach's company] raises about the terms of the Partnership Agreement. And Orbit has not plausibly alleged that, in structuring the deal the way he did, Taylor acted in bad faith. Defendants' motion to dismiss will therefore be granted, and Orbit's claims will be dismissed with prejudice."
Taylor's lawyers also noted that the NBA does not view this initial sale as a transfer of ownership.
"This contract doesn't contractually commit them beyond anything other than 20 percent," Jackson said. "And until they exercise the second tranche, unless and until, Glen has absolute control over the partnership."
He continued, "Anytime there is a change of ownership interest that changes the controlling owner, the NBA is far more careful and in depth because that's the people that are the face of the NBA."
The lawsuit also initially raised concerns among the fan base that there was no language in the agreement tying the team in Minnesota, as Taylor said there would when it was first announced. Legal experts have said such language would be difficult to enforce in court even if it had been included, and Taylor has also said the NBA would not want to move the Timberwolves, who are in a top 15 media market.