Mat Ishbia made headlines earlier this year when he bought the Phoenix Suns at a valuation of $4 billion. The former Michigan State walk-on has become a billionaire thanks to serving as the chairman, president, and CEO of United Wholesale Mortgage. He has a higher net worth than Michael Jordan and LeBron James combined.
However, the gap between those net worths is closing. Ishbia had to pledge more than half of his UWM shares to be able to purchase the Suns. The stock was worth $4.6 billion, which Ishbia used to back two loans he made mere days before buying the Suns.
Pledging shares means taking a loan against securities you already own. It's not an uncommon business practice, but it can have an impact on net worth in the short term (and potentially long-term if the move backfires). Ishbia's net worth dropped an estimated $3.4 billion after he pledged his shares.
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Ishbia holds his stake through SFS Holding Corp. SFS owns 94% of UWM's outstanding stock and pledged 805 million shares for the two loans. Though other CEOs, like Tesla's Elon Musk, have pledged their shares, it's rarer to see someone tie up this large of a holding in collateral.
These loans are margin loans, meaning Ishbia will be keeping a close eye on UWM's stock price. If the value drops, lenders can request that the loan be repaid, or, failing that, they can ask for extra collateral.
Ishbia agreed to purchase the Suns in December 2022 after former owner Robert Sarver was accused of racist and sexist behavior and inappropriate workplace conduct. The deal includes more than a 50% stake in the Suns and the WNBA's Mercury.
Since purchasing the team, Ishbia fired head coach Monty Williams, who the Detroit Pistons hired and made one of the highest-paid coaches in the NBA. Ishbia also traded Chris Paul in exchange for Bradley Beal, putting together a superteam in Phoenix with Beal alongside Devin Booker, Kevin Durant, and Deandre Ayton.
He's clearly going all-in on the Suns — in more ways than one.
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