[Amick] Less money, more problems? Rockets owner refutes rumors of his demise

https://theathletic.com/1788029/202...s-rockets-owner-refutes-rumors-of-his-demise/

Some stories unfold in the strangest of ways.

So before we talk with the Houston Rockets’ Tilman Fertitta about his view on the NBA’s suspended season, and all the endless speculation in league circles that the 62-year-old restaurant and casino mogul who paid a record $2.2 billion for the team in September 2017 is the most likely owner to face serious financial hardship if this economic downturn continues because of the coronavirus, know this much about this particular angle: I didn’t call him in pursuit of this conversation, nor did he call me. The details in between don’t matter much, but it’s important to make it clear that this discussion was organic and, in the end, quite candid.

No matter what happens next, Fertitta deemed it worthwhile to go on record about the constant rumblings that he’s under duress. Between the headlines about the massive furloughs at his companies, the $2-million-per-day losses or the part he played in Texas’ decision to begin reopening on Friday, there has been no shortage of discussion about his financial viability of late in the Lone Star State.

But here’s the bottom line about Fertitta’s bottom line, if you will, from his vantage point: He remains confident that he’ll come out of this perilous period, and the notion of him taking on minority owners to ease the economic pain or perhaps even selling the Rockets at some point is simply not happening.

“The Rockets would never be sold, unless the whole world came to an end and then it wouldn’t matter, ok?” said Fertitta, whose Rockets (40-24) were tied for fifth in the Western Conference when the season was suspended. “If I ever sell the Rockets, it’s because we don’t exist anymore as a country with the rule of law. We’re having anarchy in the street, and at that point there’s no buyers.

“There’s a reason that I made it through the ’87 financial crisis, and 2000, and the 2007 (recession), because I’ve always kept so much liquidity. It’s just like me borrowing $300 million a few weeks ago (at a steep rate of 13 percent, according to The Houston Chronicle), when I was able to do it when nobody else could at first. …Why not buy even more insurance? I have a huge amount of liquidity, and a lot of different sources of income. I’m not happy right now (with the financial impact), but I haven’t taken an equity partner, I didn’t have to give up warrants to borrow money. …”

And he has zero interest in selling any minority ownership stakes.

“I don’t need partners so I don’t have partners,” he said. “There’s just no interest in having partners. I think all owners would love not to have partners, but not all teams financially can do that. I have the opportunity that me and my family can own this team 100 percent, and there’s no reason to ever change that.”

When you ask NBA types about which owners could face trouble — be it executives, agents or fellow owners — it’s Fertitta’s name that comes up the most. But when it comes to the way in which various teams have reacted to the pressures of this pandemic, there are plenty of other teams to talk about at the moment too.

The Utah Jazz had layoffs that were the result of ownership’s involvement in car dealerships and theaters. The Philadelphia 76ers pondered 20 percent pay cuts before ultimately reversing course. The Lakers took $4.6 million from a federal government program that was intended to help small businesses before eventually giving it back.

Meanwhile, the Rockets — according to Fertitta and other Rockets officials — have not had layoffs or pay cuts.

“Absolutely not one,” Fertitta said. “We’ve had no pay cuts. We didn’t apply for any funds within the Rockets, governmental or anything.”

Fertitta also highlighted the Rockets’ payroll ($130 million; 13th in the NBA, with Portland first at $137 million), as well as the fact that they’re in the process of building a new practice facility and even bought a 767 plane for the team’s players. To that end, he repeatedly said his Rockets business was “in a silo” of its own that’s entirely separate from his restaurant and casino businesses.

“The Rockets have no problem,” he said. “The Rockets are sitting on a huge revolver and a bunch of cash right now. And the Rockets are able to build up cash because nobody has to take it out to live on.”

Considering what the Rockets endured with the China saga in October, when general manager Daryl Morey tweeted support of Hong Kong protesters and the eventual losses from the backlash totaled approximately $20 million (according to ESPN), that’s quite a statement. And this separation of Fertitta’s business interests matters, of course, because his recent struggles with his non-Rockets ventures have been well-chronicled.

In late March, the Landry’s Inc. owner furloughed approximately 40,000 workers from his restaurants, Golden Nugget casinos and hotels. Nonetheless, help is on the way as of Friday — in more ways than one. Texas governor Greg Abbott, who included Fertitta as part of the 39-person special advisory council that strategized about the reopening of the state, is allowing restaurants, theatres, retail stores and malls to open on a limited basis (only 25 percent of capacity allowed).

“I have cash flow to last me a long, long time with no restaurants opening,” Fertitta said. “But yet, by this weekend, I’m going to have over 200 (restaurants) open and almost all my hotels open. Different people are in different situations, and what people don’t understand is I have more buckets than most.”

This was a far more optimistic tone than Fertitta took while discussing the impact of the pandemic last month, when he told Bloomberg in an interview published on March 25 that “I can’t go forever but I can go for a few months.” The article also indicated that his net worth had fallen by approximately a third since February, down to $3.2 billion (the decline bumped him off of the Bloomberg Billionaires Index that highlights the world’s top 500 richest people).

If there’s one thing Fertitta wanted to make clear in our Thursday chat, it was this: “I would just tell the truth, which is that (Fertitta) owns 100 percent of his team and doesn’t have any desire to take partners,” he said.