UWM Holdings' Ishbia part of group interested in buying Denver Broncos
Mat Ishbia, CEO of Pontiac-based mortgage giant United Wholesale Mortgage Holdings Corp., is joining his brother and other investors to make a bid for the Denver Broncos football team, according to at least one source familiar with the situation, confirming multiple media reports.
It would be the latest venture for the freshly minted billionaire after taking his family-owned business public last year in a merger worth more than $16 billion with a special-purpose acquisition company affiliated with Alec Gores, whose brother, Tom, owns the Detroit Pistons.
The acquisition of the Broncos could be the priciest team sale in North American sports history. The Broncos were put up for sale last week by the trust of owner Pat Bowlen, who died in 2019. The team is valued at $3.8 billion by Sportico.
Ishbia, 42, wasn't made available for comment on Thursday.
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A one-time walk-on point guard at Michigan State University, Ishbia played on coach Tom Izzo's 2000 NCAA championship basketball team. The CEO last year made the largest single donation by an individual to MSU in its history to support its athletics program, and in October, Ishbia was at the forefront of the effort to secure a new contract for MSU football Coach Mel Tucker that made him one of the highest-paid coaches in college football.
Ishbia took over his father’s business in 2013. UWM’s team has grown from just 12 people in 2003 when Ishbia joined the firm to more than 8,000. It moved from Troy to its newly constructed headquarters in Pontiac in 2018, which then was expanded with the acquisition of another building that opened in 2021.
The pursuit of the Broncos acquisition comes at an interesting time for Ishbia's business. The mortgage industry is experiencing significant contraction as interest rates have pushed upward, reducing demand for refinances, especially, and resulting in layoffs and buyouts at competitors. UWM posted a 47% net income decrease in the first quarter of 2022 to $453.3 million on $38.8 billion in loan origination volume. It still issued a 10-cent quarterly dividend.
UWM is exclusively a wholesale lender, originating loans only through independent brokers who work directly with home buyers and owners to find the best mortgage for them across multiple lenders. Since brokers have a larger market share in the home-purchase business over refinances, Ishbia has argued UWM, the country's largest wholesale lender by volume, is better positioned to weather the downturn and even will surpass crosstown rival Rocket Mortgage as the top overall mortgage lender in the United States by 2024.
"We think we'll do even more in the second quarter of 2022," Ishbia said about the company's purchase volumes during a first-quarter earnings call earlier this month. "We are confident that UWM will continue to be the No. 1 purchase lender in America and eventually the No. 1 overall in America."
Ishbia has said UWM won't lay off any employees. Retail over wholesale mortgage positions are most of the roles being cut in the industry, said Kevin Heal, analyst at investment service firm Argus Research. Natural attrition may be enough, he added.
"It’s not the best timing, but the opportunities to buy a professional sports franchise are few and far between," Heal said. "Publicly, it’s probably not a great look, but it’s his money, and he's got other groups of investors, and we'll see if he can get it done."
The last NFL team to be sold, the Carolina Panthers, went for $2.3 billion in 2018. The record price for a North American team is $2.4 billion for the New York Mets baseball franchise in 2020.
UWM shares closed up 1.77% on Thursday to $4.02 following the Broncos news. But its stock is down 35% year-to-date. Ishbia, who owns a 71% share of the company, is valued at $4.6 billion, down from $9.7 billion in 2021, according to Forbes.
"An NFL team is probably a good investment," said Erik Gordon, a professor at the University of Michigan's Ross School of Business. "It’s an investment whose success is not correlated with the stock market or the real estate market. Just as a cold-blooded investment, people don’t usually lose money on buying an NFL team."
The franchise also could be another avenue to promote UWM and the wholesale channel — and a jab at rival Rocket, which signed a multiyear agreement with the NFL in 2020 to be its official mortgage sponsor.
But Dan Gilbert, Rocket founder and chairman of parent company Rocket Companies Inc., isn't a member of the selective group of NFL owners. He is the owner of the Cleveland Cavaliers basketball team. Last month, a group that included Gilbert and owners of the Chicago Cubs withdrew interest in acquiring England's Chelsea Football Club.
UWM has sponsored professional sports teams. Last year, it signed multiyear agreements for its logo to appear on the Detroit Pistons' jerseys and Red Wings' helmets.
Ishbia's older brother Justin, 44, is focused on the Chicago-based private equity firm, Shore Capital Partners, which he founded and for which he works as managing partner. Justin Ishbia holds a 22% stake in UWM and is valued at $1.4 billion, according to Forbes.
After UWM went public, Mat Ishbia announced a $32 million donation to MSU's athletics program with $20 million allocated for the football program and the expansion of its facilities. The basketball program received $2 million, while another $2 million will help create the Spartans For Life Fund focused on leadership and career development. The residual amount of the commitment was to create the MSU Athletics Excellence Fund to both provide flexible, unrestricted funding for the department.
“This donation is not about me,” Ishbia said at the time. “This is to give credit to and thank coach Tom Izzo, the business school and Michigan State University for the incredible impact they have had on my life.”
Last fall, UWM announced it was sponsoring members of Michigan State’s football and men’s basketball teams — 133 student-athletes — by providing those players with $500 a month for the entire 2021-22 school year, a move allowed under relaxed rules for student-athletes earning money off their name, image and likeness.
"I was a student athlete, a Michigan State basketball player, and you didn’t have much money," he told The Detroit News in October. "You didn’t have time to go get a job, because you’re a student athlete playing basketball or playing football.
"This is not a scholarship. It’s a sponsorship, which means I am paying them for services. They are posting on social media ... to go out there and educate consumers about FindAMortgageBroker.com."
Last fall, he also came alongside fellow donor Steve St. Andre to pony up most of the money for the 10-year, $95 million contract for MSU's Tucker.
“You don't pay someone to not leave,” Ishbia said. “You pay them because they're going to stay. Tucker is going to be part of Michigan State for years and years to come. You take care of those people.”
Bowlen's trust has a fiduciary duty to his seven children to select the highest bid for the Broncos, according to 9 News, an NBC affiliate in Denver. The chosen owner also must receive approval from the NFL’s finance committee and 75% of the league’s 32 owners.
bnoble@detroitnews.com
Twitter: @BreanaCNoble
The Los Angeles Times contributed.