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Do IT this week: Layering
Quicken Loans owner separates mortgage woes from team payroll plans
By Brian Windhorst
Beacon Journal sportswriter
Published on Tuesday, Aug 21, 2007
CLEVELAND: The Cavaliers have yet to make a free-agent signing this offseason.
The mortgage industry is suffering an unprecedented crisis with a credit crunch and skyrocketing foreclosure rates, directly affecting the bottom line of giants like Quicken Loans, the primary company of Cavs owner Dan Gilbert.
These two statements are facts, but they are not related. That's something that comes from Gilbert himself.
''There is zero connection between any current events in the mortgage markets with the strategy, tactics and payroll of the Cleveland Cavaliers,'' Gilbert said in an e-mail message Monday.
The Cavs have been very conservative in the free-agent market, even with its own restricted free agents Anderson Varejao and Sasha Pavlovic, and some fans have begun to wonder if it has anything to do with the Livonia, Mich.-based business. Especially because the Cavs are within a few million of the NBA's luxury-tax threshold. If the team re-signs Varejao and Pavlovic, as General Manager Danny Ferry said he intends to, it will cross the threshold for the first time in history.
Gilbert, who is soon to cut the ribbon on a new $20 million practice facility in Independence, has been one of the most aggressive spenders in the NBA since buying the franchise.
Though the Cavs have recently restrained themselves from deals that would've added significant money to the payroll the failed effort to trade for Sacramento Kings point guard Mike Bibby among them after getting to the NBA Finals, Gilbert isn't getting cheap now.
''Danny Ferry and his staff have been and are continuing to work very hard to improve the chances of the Cavaliers to make that one last step in achieving our goal of an NBA Championship,'' Gilbert said. ''There have been no changes in the strategy or liberal fiscal parameters that have been laid out for Danny and his team to make the right decisions that put our organization in the best position to win in the short and long term.''
Quicken Loans has been a cash cow for Gilbert, making him a self-made billionaire in the past decade and enabling him to make major investments like he did in 2005, buying the Cavs for $375 million.
But the Cavs, like his other companies such as Fathead, a maker of wall-sized sports decals, and new AHL hockey team the Lake Erie Monsters, operate independently of Quicken Loans.
The Cavs are coming off their best revenue season ever, setting sellout and attendance records and cashing in by hosting 10 soldout playoff games.
Gilbert's Cavaliers Operating Company also runs Quicken Loans Arena, profiting off concerts and other arena events.
Quicken Loans itself is also a private company, so it doesn't have to make its books public.
That hasn't been the case for larger competitor Countrywide, which has seen its stock sink 53 percent this year on concerns over the mortgage industry.
Gilbert has said his company still plans on booking a record $20 billion in loans in 2007. noweb
Brian Windhorst can be reached at bwindhor@thebeaconjournal.com. Check out his blog at http://www.ohiomm.com/blogs/cavs/.
CLEVELAND: The Cavaliers have yet to make a free-agent signing this offseason.
Get the full article here.
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