Mat Ishbia, billionaire mortgage lender, purchasing majority ownership of Suns, Mercury

Editor’s note: An earlier version of this story stated that Mat Ishbia was buying the Suns and Mercury for $4 billion. The official announcement clarified his group is buying more than 50 percent of the teams in a deal that values them at $4 billion.

By Shams Charania, Bill Shea, Sabreena Merchant and John Hollinger

Billionaire mortgage lender Mat Ishbia and his brother Justin have agreed to purchase a majority stake in the NBA’s Phoenix Suns and WNBA’s Phoenix Mercury, the teams announced Tuesday. The agreement values the Suns and Mercury at $4 billion. Here’s what you need to know:

The deal involves the sale of more than 50 percent ownership of the teams, including all of majority owner Robert Sarver’s interest and a portion of the minority partners’ interest.
Sarver initiated the sale process for the teams in late September.
The NBA suspended Sarver from both teams for a year following the league’s investigation into allegations he fostered a hostile and toxic work environment. Sarver was also fined $10 million and ordered to complete a training program focused on appropriate workplace conduct and respect.
Ishbia, a national champion on Michigan State’s basketball team in 2000, is the chairman and CEO of Michigan-based mortgage lender United Wholesale Mortgage, now UWM Holdings.
Mat will serve as governor and Justin will serve as alternate governor.

Official: Mat and Justin Ishbia reach agreement to buy majority stake of the Phoenix Suns and Mercury from Robert Sarver: pic.twitter.com/dEe6QGfZJP

— Shams Charania (@ShamsCharania) December 21, 2022

Backstory

In November 2021, the NBA launched an investigation into Sarver after he was accused in an ESPN story of fostering a toxic and hostile work environment. The allegations also included Sarver making racially insensitive comments and fostering a misogynistic environment that discouraged women from reporting issues to human resources.

The law firm of Wachtell, Lipton, Rosen & Katz conducted the investigation and interviewed 320 individuals, including current and former employees of Sarver’s teams. More than 80,000 documents, as well as emails, text messages and videos, were evaluated during the investigation, which Sarver and the Suns and Mercury organizations participated in, according to the NBA.

Additionally, the investigation found other instances of workplace misconduct by Suns employees that were not related to Sarver. The misconduct included racial insensitivity, mistreatment of female employees and inappropriate comments on sex or sexual orientation. Investigators found that the Suns’ human resources department “was historically ineffective” and was not a trusted resource for employees who had been subjected to improper workplace conduct.

The Suns hired a new head of human resources in July 2021, and the team has updated its workplace policies and implemented ways for employees to report workplace conduct and for internal investigations to be conducted, per the NBA. Following the league’s investigation, the Suns and Mercury must meet a series of requirements, including reporting any instances or allegations “of significant misconduct” by an employee to the NBA.

PayPal, the Suns’ jersey sponsor, vowed to end their partnership with Phoenix if Sarver remained part of the organization.

Who is Mat Ishbia?

Ishbia for years has been a mortgage industry rival with Dan Gilbert, the Detroit billionaire who owns Quicken Loans and the Cleveland Cavaliers. They compete for business talent in the metro Detroit market and apparently will compete as NBA owners, as well. Ishbia has used sports via naming rights and marketing (including jersey patches with the Detroit Pistons, NIL deals with Michigan State and branding of a local developmental pro baseball league) to promote his United Wholesale Mortgage business that dominates that sector of the industry — its primary clients are middle-man mortgage brokers that offer/sell home loans to consumers rather than directly working with homebuyers as Quicken does via its Rocket Mortgage business. Both mortgage companies employ thousands.

Ishbia’s UWM Holdings Corp, the parent company of United Wholesale Mortgage, did $1.6 billion in net revenue last year on $226.5 billion in mortgage originations. UWM is the nation’s biggest mortgage wholesaler by volume and had been for several years. That helped Ishbia join the billionaire ranks last year when he took the company public via a SPAC deal.

Ishbia’s father, Jeff Ishbia, founded the company in 1986, and Mat Ishbia joined in 2003 and became CEO in 2013. The son is a majority owner with his brother and others holding minority equity stakes.

Forbes pegs Mat Isbiah’s worth at $5.3 billion while it estimates Dan Gilbert at $17.5 billion.

Ishbia’s sports connections

Ishbia has deep basketball roots and joined Michigan State’s basketball team as a walk-on guard in 1999. That season, the Spartans reached the NCAA Tournament as the No. 1 seed in the Midwest. The team went on to beat Florida in the national championship, capturing Michigan State’s second title.

Through three seasons, Ishbia averaged 0.6 points and 0.3 rebounds in 48 games.

In February 2021, Ishbia gifted Michigan State’s athletic department $32 million. Out of that donation, $20 million went to the football program. About $2 million of his donation went directly to the MSU Men’s Basketball Excellence Fund, and the rest of the funds were aimed at helping all athletes.

“I think what this donation hopefully shows is that when you’re a Spartan, you’re a Spartan for life,” Ishbia told The Athletic at the time of his donation. “People are gonna want to be part of the Michigan State family.”

Before his deal to buy Phoenix’s professional basketball teams, Ishbia also tried to purchase the NFL’s Denver Broncos. He reportedly lost a bid earlier this year for the team and has also reportedly explored plans to pursue the Washington Commanders. Washington owner Dan Snyder is exploring selling the team and hired Bank of America Securities in November to consider potential transactions.

What to make of the sale price

Forbes has the Suns valued at $2.7 billion (13th, the average is $2.86 billion) while Sportico has them at $3 billion (13th, which is also Sportico’s average NBA team value). Sarver paid $401 million in 2004 for the Suns/Mercury.

Like Steve Ballmer overpaying ($2 billion) for the Clippers in 2014 to oust Donald Sterling, the Suns selling for $4 billion will have a ripple effect on team valuations — the “rising tide lifts all boats” theory. The $4 billion price tag puts the Suns between the Lakers and Nets on Sportico’s list and between the Bulls and Celtics on the Forbes list. — Shea

What this means for the Suns’ future

After the initial shock at the price, the first reaction from NBA personnel that I talked to at the G League Winter Showcase this morning was questions about the future implications for the Phoenix Suns’ front office. While Suns team president James Jones is a former Executive of the Year winner, there is always the threat of sands shifting whenever new management comes in. In particular, it’s not clear how Jones’ somewhat unique approach to scouting will play with the new jefe. — Hollinger

Ishbia’s Michigan State connections

More to the point, Ishbia’s Michigan State roots point to some obvious potential maneuvers. Nobody will be shocked if Tom Izzo moves into a consulting role with the Suns once he’s done coaching, for instance.

One also wonders if any of the five former Michigan State players who are potential free agents this summer — Draymond Green, Bryn Forbes, Gary Harris, Miles Bridges and Xavier Tillman, Sr. — might become more prominent parts of the Suns’ offseason plans than they otherwise might have been. — Hollinger

Short-term considerations for the Suns

In the short term, however, the biggest question is the simplest: Is Ishbia willing to pay luxury tax beyond this season? While a sale likely won’t close in time for him to force the Suns (currently $16.9 million over the tax line) to avoid the tax for 2022-23, their ability to remain viable contenders in the West probably depends on the answer being “yes” in 2023-24. — Hollinger

Ishbia’s role with the Mercury

Ishbia has high expectations to meet as the owner of the Phoenix Mercury, a franchise that is a standard-bearer in the WNBA. This is the team that boasts the longest active playoff streak in the league, is a three-time champion and is a consistent top-three finisher in attendance, leading the league four times in the last decade.

Mercury players laud the organization for treating them on par with their male counterparts in terms of access to the same facilities and amenities. Members of the Mercury also find opportunities to work with the organization in the WNBA offseason, such as Emmy-winning Skylar Diggins-Smith and Sophie Cunningham joining the Suns broadcast in recent years.

Fortunately, the groundwork has been laid for a successful WNBA franchise in Phoenix — Ishbia doesn’t have to reinvent the wheel here, just follow the existing path. — Merchant

Priorities for the Mercury

Eventually, Ishbia and the Mercury will have to figure out what this team looks like without Diana Taurasi, but that’s at least a problem for another year. For now, he can bask in the good vibes of a contending team and celebrate Brittney Griner’s return all season long. I

f Ishbia could somehow work with the Footprint Center to ensure that all of the Mercury’s home playoff games are hosted in that arena, he would be an immediately beloved figure in Phoenix. — Merchant

Required reading

(Photo: Al Goldis / AP Photo)