Phoenix Suns to be sold in record-shattering deal

The Phoenix Suns are about to get a new owner, in what could be one of the most consequential team sales in NBA history.

Driving the news: Mat and Justin Ishbia yesterday announced that they've agreed to buy a majority sake in the Suns, and the WNBA's Phoenix Mercury, at a $4 billion valuation.

Why it matters: This is a record-shattering price for a franchise that plays in just the 11th-largest U.S. media market, doesn't own its arena and has never won a league title.

• This price massively increases the value of all other NBA teams, possibly spurring new deals. It also could help Marc Lore and Alex Rodriguez finish finding their financing to buy out the Minnesota Timberwolves, since they're now getting in at a veritable bargain.
• It's also an ROI validation for private equity, given that Dyal Capital bought a small stake in the Suns last year at just a $1.55 billion valuation.
• Finally, it helps the NBA rid itself of Suns owner Robert Sarver, who recently was suspended by the league for one year after an independent investigation found instances of the Suns owner repeatedly saying the N-word and engaging in "inequitable conduct toward female employees."
• Finally, the deal comes just days after ESPN reported that the Suns' workplace issues go far beyond just Sarver.

Who? Mat Ishbia is CEO of UWM, a Michigan-based wholesale mortgage lender that in early 2021 went public via a Gores Group SPAC. At the time it was the largest-ever SPAC deal, at a $16.1 billion enterprise value. But that figure has since fallen south of $10 billion, as UWM's stock has been stuck in the $3-$4 range for most of 2022.

• Mat Ishbia also has some basketball cred, as a walk-on for the Michigan State team that won the national championship in 2000. He's since become a top donor to the program.
• Justin Ishbia is founding partner of Shore Capital Partners, a Chicago-based private equity firm focused on microcap companies.

Backstory: Other Suns suitors are pretty upset off right now, per multiple sources. Sarver had hired Moelis & Co. to run a process through which second-round bids were due next month, but the Ishbias executed an end-run.

• This basically ends the era of bank-led team auctions, or at least of bidders following the proscribed rules. Want to buy a franchise? Go straight to the seller.

Deal details: Sarver controls the Suns, but doesn't own a majority position. Instead, he's believed to have around a 35% stake. So the Ishbias are buying out him, Dyal and some other small stakeholders.

• Word is that they've got agreements to buy around 60%, and that they spent yesterday seeking financing partners so as to afford an even larger stake. Dyal is believed to be the only minority owner with tag-along rights.
• No information yet on who else is in their investment group, although the NBA recently agreed to allow pension and sovereign wealth funds to buy in.

The bottom line: This is a slam dunk for NBA owners, and for the one dealmaking niche that isn't being depressed by economic uncertainty.