How Tilman Fertitta got the Houston Rockets
The Houston Rockets have worked their way up to become one of the best teams in the NBA over the last decade. Led by James Harden and Russell Westbrook, the Rockets are still seeking their first championship in 25 years. Certainly, there are a lot of factors that go with winning a title. One of which is having the right ownership.
For the Rockets, they are working with a relatively new owner in billionaire businessman Tilman Fertitta, a Houston native. The restaurant mogul acquired the franchise for a record $2.2 billion in 2017 from former owner Leslie Alexander, who owned the team for over two decades from 1993.
In June 2017, Alexander announced that he had intentions to sell the team. Fertitta immediately expressed his interest in buying his hometown Rockets. He outbid other interested parties with $2.2 billion, and that was enough for Alexander to accept the deal.
In February that same year, Forbes had estimated the franchise to be worth $1.65 billion, the eighth highest in the league. At the time of the purchase, Fertitta’s net worth stood at around $3.1 billion mainly due to his ownership of restaurant empire Landry’s, Inc. and Golden Nugget Casinos and Hotels.
According to Forbes, Ferttita reportedly did not have much cash on his hands at the time of the purchase. Much of the funding, however, came from a hefty amount of debt. Part of it came from a loan from Alexander, while $1.4 billion came from bonds issued by Golden Nugget and Landry’s, with interest rates somewhere between 6.75 percent and 8.75 percent.
Fertitta already attempted to purchase an NBA team before. In fact, he and Alexander both bid for the Rockets back in 1993. Ultimately, Alexander got the deal.
In 2017, Fertitta finally got his opportunity. Fertitta expressed that owning an NBA franchise, especially the Rockets, became a dream come true for him. He also said that he made the purchase as an asset that he will pass down to his family and the next generation.
It did not even take three years for Ferttita to see his massive investment prosper. In February this year, Forbes values the Rockets at a reported $2.47 billion, still the eighth highest in the NBA. However, the restaurant giant is due to face a lot of losses because of the coronavirus pandemic.
Aside from the abrupt hiatus of the NBA season, Fertitta’s businesses have also suffered as a result of the crisis. His restaurants are nearly non-operational while all of his casinos are closed down due to the pandemic. On March 25, Fertitta said that he furloughed and laid off 40,000 employees at his restaurants and casinos last month. The billionaire Rockets owner, who is reportedly worth $4.8 billion nowadays per Forbes, drew a ton of criticism from the public for doing so.
Over his course as Rockets owner, Fertitta hasn’t been a fan favorite among Rockets fans. As SB Nation detailed, he has shown that he isn’t particularly pulling out all the stops to bring a championship to Houston. Fertitta hasn’t been willing to pay the luxury tax for the most part. He even let go some important free agent players such as Trevor Ariza following their 2017-18 season, where they finished as the best regular season team in the NBA.
Obviously, Fertitta is just starting with his gig with the Rockets. Only time will tell if he’s really just in it for the money or to make Houston a city of champions for years to come. So far, the early returns suggest the former.