4 hours ago
Since Mat Ishbia didn’t have to sell a ton of stock in his mortgage company (UWM) to fund the Phoenix Suns, he maintained majority control via voting rights (~90%) and the board of directors. The only problem with this strategy is what happens when things go south. Say the stock you pledged starts to drop. 10% in a month. 40% in a year. 75% in five years. Every time that happens, the bank calls you and asks you to put up more collateral. This is a margin call. Just days before he purchased the Phoenix Suns in 2023, Ishbia secured two loans from JPMorgan. Those loans gave Ishbia the liquidity he needed to complete the $4 billion purchase, but in exchange, Ishbia’s personal holding company had to pledge 805 million shares of UWM stock as collateral. That pledge represented more than half of all UWM's outstanding stock, and the company’s stock price has since fallen more than 70%. In simple terms, that means Ishbia put up roughly $4.6 billion of UWM stock as collateral with JPMorgan, but those shares are now worth just $1.15 billion. So what happens next? When will JPMorgan reach its limit? And if JPMorgan does reach a limit, does that mean Mat Ishbia will have to sell the Phoenix Suns? UWM’s stock has fallen about 70% since Ishbia initially pledged his shares as collateral, and people are justified in asking whether this has implications for Ishbia’s broader sports portfolio, including the Phoenix Suns and Mercury and a piece of the Chicago White Sox. The logic is that UWM’s stock has dropped so low that Ishbia has no choice but to repay the JPMorgan loans with cash. And to access that much liquidity in such a short period of time, Ishbia might have to sell equity stakes in his sports teams.
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