Mat Ishbia won’t be the sole controlling owner to own the NCAA Division I Men’s Basketball National Championship ring (MBNC). Charlotte Hornets freeholder Michael Jordan won one in 1982.
Mat Ishbia hardly had a future as a professional basketball. He was a point-guard who was a walking-on at Michigan State University, where he was on the bench in the team’s 2000 national championship run and “had to be the hardest working guy to be the thrash player on that team” and considered coaching his only way to remain engaged in the sport, he stated to The Forbes. The situation is set to change.
The news broke on Tuesday. Forbes reported an ESPN story in which Ishbia and his son Justin Ishbia had agreed to purchase the ownership of the NBA’s Phoenix Suns at a record amount that puts the team’s value at around $4 billion. The Phoenix Mercury of the WNBA Phoenix Mercury will also be part of the deal.
The Suns and the Mercury were up for sale in September following accusations of misogyny, racism and a toxic work environment centered on the owner who controls the team. Robert Sarver had rocked the organization, prompting the NBA to suspend Sarver’s employment for a year and penalize him for $10 million. Forbes estimated their assessment of the Suns as $2.7 billion in October. Sarver bought the team for $41 million in 2004. If the deal comes to fruition, it’ll likely turn Sarver into a billionaire. (A Sarver representative could not be reached. Sarver was not available.)
Forbes estimates the value of Mat Ishbia, the chairman and chief executive officer of the UWM, a Michigan-based loan lender United Wholesale Mortgage, is worth $4.7 billion. The bulk of this is due to his 71 percent ownership stake in the business, which is listed down on the New York Stock Exchange as UWM Holdings Corp. His brother Justin also holds 22% of UWM and has a value of $2.1 billion, as per Forbes estimate. Together they are buying up 60 percent from their stake in the Suns to the tune of $2.4 billion, which puts the team at around $4 billion, sources familiar with the deal informed Forbes Mike Ozanian. The previous record value in the purchase of an NBA team was $3.2 billion Joe Tsai paid for the Brooklyn Nets in 2019.
The board of governors for the NBA has to decide whether to accept Mat Ishbia as the new controlling owner. If that isn’t an issue, the 42-year old could replace his predecessors, the Memphis Grizzlies’ Robert Pera and the Utah Jazz’s Ryan Smith as the youngest controlling owner of the league. A representative from Mat, as well as Justin Ishbia, declined to comment.
The billionaire brothers are entering the world of professional sports and professional sports. They have their fathers to thank for laying the foundations for their eventual fortune. An attorney by profession but an entrepreneur at the core, Jeff Ishbia launched several ventures, including an alarm business, a title company, and a mortgage business at the time of his death. It was a good fit with his legal expertise and required a little time.
Mat didn’t have plans to get into the mortgage industry. After winning a national championship in the NCAA tournament at Michigan State, where he played in 48 games over three seasons, and scored an average of 0.6 scores per contest, he was not sure if his father’s outfit of 11 players was all that thrilling. However, after graduating at the end of 2003, he decided to give the idea a go, as per his father’s suggestion. “I went there with the concept that I was gonna be there for six months, a year,” Mat said to Forbes on January 20, 2021. “No one is a fan of mortgages. I’m not happy with them.”
Although the company was slow in the beginning, UWM had granted just 45 mortgages during Feb 2004- and then had been “barely breaking even” through 2006–Ishbia decided to remain. The company then took massive breaks during the financial crisis of 2007-2008. Contrary to big-name mortgage firms like New Century and Countrywide, UWM could not issue subprime loans. When the larger companies went under, the Ishbias took up the newly formed business and the available staff. As of 2009, UWM provided more than $2 billion in loans.
It was a pivotal moment. The company was at its peak year, and Mat’s father inquired about what he was planning to do in the future. “I want to be the largest wholesale lender in the country,” Mat stated. In the following six years, Mat took over the business from his father (who is still a member of UWM’s board of directors) UWM Board of Directors) and helped UWM grow its top line without requiring external funding. UWM began issuing more than $1 billion of mortgages each month and raking in 100 million in annual profit in 2015.
Then the pandemic shook the entire system. To help the economy to recover, the Federal Reserve committed on March 23, 2020, to purchase “unlimited” amounts of mortgage securities. It sent mortgage bond prices skyrocketing, leaving interest-rate-hedging lenders like UWM facing margin calls. Mat sought out Goldman Sachs for a solution, and they agreed on a special-purpose acquisition corporation. A publicly traded shell company seeks capital from investors in a SPAC deal. It keeps the funds in the escrow until it locates an individual company to put the money into. This is a quicker and more controversial route to publicizing than a traditional IPO.
Then, in January of 2021, UWM transferred 6% of its shares to a SPAC run by billionaire investment guru Alec Gores and raised $925 million with a valuation of $16 billion. The deal made Mat into a multi-billionaire who had an estimated value of $12.6 billion. It also gave Justin a fortune of $4 billion.
The market hasn’t been favorable to UWM, however. After launching with $11.95 for shares in January 2021, UWM’s stock has dropped by two-thirds of its value. Its price ended at $3.78 at the close of business on Tuesday. Mat’s wealth, primarily held in UWM shares, has dipped about 63%. Justin, also the director of the private equity company Shore Capital Partners is down by 48% from January 2021. Since the Ishbia brothers don’t have billions as cash in their accounts, it’s unclear what they’ll be funded.
If they can achieve this feat this year, it’s a great time to join the ranks that comprise NBA ownership. The average NBA team’s worth has increased by 15% in the past year and is now $2.86 billion. This is due to the record sponsorship, advertising revenues, and high hopes for the successive league’s rights to media agreement. (NBA teams have seen an increase of 1200 percent since 2002.) It is estimated that the NBA makes $2.66 billion annually, thanks to an array of media agreements, including ESPN, Turner, and ABC, divided among each team. The next deal could increase the sum.
