Money, money, money! - A look at Sarver's finances

I’ve been dreading this day for some time now. I knew it wasn’t a matter of "if," rather "when." The point when this economic crisis hits close to home.

Over the past six months I embarked upon a job search and experienced the harsh realities of the economic contraction. Through the hard times, I always had the world of sports to fall back on. Sports was my disconnect from the real world; whether it was the sheer enjoyment of watching a game, neglecting a fantasy team or making quick witted quips about a multi-millionaire athlete declaring he "has a family to feed." Sports were my release.

But that has all changed.

The Suns are looking to shed upwards of $40 million in salary. That’s a lot. I know Suns owner Robert Sarver has been called "cheap" by many in the past, but this seems extreme even for him. Is this driven by a desire to improve and put a better product on the floor?

Not according to JA Adande’s chat.  Two responses stood out, in reference to the Suns.

 J.A. Adande: More than rebuilding mode, the Suns are going to shift into cost-saving mode. So I wouldn't look for them to make a move that puts them in contention, because that would probably mean taking on expensive, long-term contracts.

And

 J.A. Adande: One thing I was told by a Suns source was that moves would not be made for competitive reasons, it's financial. So if you're not making competition a priority, it doesn't matter which team you're improving or where they play.

But I thought sports was untouchable, the last refuge. Why are the Suns going in to cost saving mode when they should be trying to win?

Then I read Bright Side of the Sun(cheap plug!), probably the best Phoenix Suns blog out there, and stumbled across this link from nba.com.  David Aldridge’s sources seem to confirm what JA Adande mentioned in his chat last week.

Is Sarver in the poor house? How bad could it be?

A quick Google search shed some light on the situation. Robert Sarver made the bulk of his money in real estate and banking. Uh oh.

Other than the Suns, Sarver’s big business ventures are Southwest Value Partners- a private real estate firm that operates in the US southwest; Meritage Homes – a publicly traded company that designs and builds single-family attached and detached homes in the southern and western United States; SkyWest – an airline; and Western Alliance Bancorp, a bank holding company of which he is President and CEO.

(Before I go any further, let me state a huge assumption – I’m making a likely erroneous assumption that Sarver has not significantly changed the number of shares he holds in each of these companies. I realize that this is likely incorrect, however I don’t have the time or resources to check the actual historical figures. Additionally, I will be using approximations and generous rounding principles.)

Currently Sarver holds approximately 4 million shares of Western Alliance Bancorp(WAB), currently trading just above $7/share. Based on current figures, Sarver’s stake in WAB is approximately $28 million – a nice figure. However, relative to 2006 figures, Sarver is down considerably. In 2006, WAB was trading around $37.50/share, giving Sarver, at the time a $150 million investment in WAB.

Similarly, Sarver holds  approximately 1.7 million share of Meritage Homes Corporation (MHC) which is trading around $15/share. $25.5 million is pretty good.  But not nearly as good as 2005, when MHC shares were valued at $92.95/share, giving Sarver just shy of $149 million.  

The airline industry has also been hit hard by the recession. As a director of Skywest, Sarver has just over 25,400 shares of the company, worth approximately $420,000. In 2005, these shares would be worth almost twice as much at $838,000.

Because SouthWest Value Partners is not a public company, I’m unable to find market valuation data or Sarver’s share count, however my guess is his stake is worth much less now than it was a few years ago. SouthWest Value Partners is a real estate investment firm that operates mainly in Arizona, California and Nevada- three of the states that have been hit hardest by foreclosures(table below).

via static.seekingalpha.com

So after some very rough calculations, Sarver’s had a bit of a rough patch, "losing" an approximate $246 million in the stock market. Maybe this explains the cost cutting and absolute fear of the luxury tax.

Or maybe it doesn't. Maybe during this time, you're like me and need sports to be that disconnect. Maybe you think the owner should put a winning team on the floor at all costs- both figuratively and literally.