ART OF THE DEAL. Seller and League Perspective

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1 ART OF THE DEAL Team Acquisition from the Buyer, Seller and League Perspective

2 Strategic Investments No longer a vanity buy Investors, not just fans Sophisticated ownerships

3 Evolution of Owners Family Ownership Wrigley, Halas, Mara, Rooney Corporations Fox, Comcast, Disney Captains of Industry Ballmer, Cuban, Allen Foreign interests

4 Multi-faceted ownership Technology Real Estate Venue Franchise Multiple sports franchises Media

5 Players involved & Respective Roles SELLERS BUYERS LEAGUE OFFICE / BOARD OF GOVERNORS PROFESSIONALS

6 SELLERS Factor in Price - Motivation to Sell Franchise Value Appreciation - NY Yankees - $8 million in 1973 to $3 Billion - Dallas Cowboys - $140 million in 1989 to $4 billion - Los Angeles Lakers - $20 million in 1979 to $2.4 billion Personal issues The Three D s Changing conditions in sport or market Labor Facility condition or location Regional economy

7 LEAGUE - OFFICE OF COMMISSIONER Due Diligence on behalf of the league Application process Evaluation process Approval Closing

8 BOARD OF GOVERNORS Expansion /Relocation Committees Evaluate initial application Meet prospective owners Recommendation to Board Board Approval Ratio of votes required

9 BUYERS Financially qualified Background Business acumen and reputation

10 PROFESSIONALS Due diligence between buyer, seller and league Negotiating Financing Deal structure ownership individuals, LLC, LP Closing

11 COMPOSITION OF OWNERSHIP GROUP Individual owner Partnership Limited Partnership/LLC Subsidiary of Larger Corporation

12 NEGOTIATING TERMS OF PARTNERSHIP & OPERATING AGREEMENT Initial investment Cash Calls Percentage of ownership Managing Partner/Decision making

13 DUE DILIGENCE Buyer s Due Diligence of the League Buyer s Due Diligence of the franchise and assets to be sold League s Due Diligence of the Buyer

14 League Ownership Criteria Financial Strength Net Worth Liquidity Debt to Equity Ratio Background - Good Moral Character Minimum investment requirements for both majority and minority ownership interests. Guarantees Stature of Ownership Group

15 Buyer's Verification League s Recent Franchise transactions Team Revenue Streams & Expenses Ticket sales, Season ticket holders/seat licenses Premium Seating, Suites and clubs Sponsorships value and term, exclusivity. Merchandising rights online and retail League revenue Broadcast, sponsorship, licensing

16 Media Rights Consideration and term of any existing deal Definition of Broadcast territory for live and non live programming Opportunity to create an RSN Digital Rights Negotiation of new deal as a condition to closing

17 Existing Venue Term Management Food, Beverage, Parking and Merchandise Naming rights, permanent signage Suite revenue for games and other events Promote other events concerts, etc.

18 New Venue Construction Design Site acquisition Financing Zoning and Municipal Approvals Government subsidy/participation Tax dollars/bonds/enterprise zones Political climate Covenant not to relocate Management rights revenue streams (parking, ads, etc) Ownership of real estate

19 Market Size and Location Population and Broadcast footprint Proximity to other teams in league Market Saturation/Competition Ability to attract Free agents Local taxes Climate Travel

20 Other Valuation Factors Pending Litigation Pedigree/On field Success Yankees, Lakers, Canadians Fan Loyalty Cubs, Maple Leafs

21 Transactional Documents Purchase Agreement Ownership Entity Operating agreement League application Conditional documents Facility Lease Broadcast agreements Stadium Financing Financing Documents Closing checklist

22 ART OF THE DEAL Putting it all together Evaluate opportunity Secure team of professionals Let's negotiate!

23 Lanza, Reich & Daniel 221 West 37th Street, 4th Floor New York, NY (212) Bob Lanza Tom Reich George Daniel

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