Even by stock-market standards, it’s been an unusually frenzied week on Wall Street. By now, you’ve no doubt heard of, if not actively participated in, the GameStop short squeeze, an unprecedented Reddit movement to undermine hedge funds by funneling money into obsolete stocks like GameStop, movie-theater chain AMC, Kodak, Bed, Bath and Beyond, Blackberry and Nokia. The financial phenomenon came to a head Thursday when investment platforms Robinhood, Charles Schwab and TD Ameritrade began restricting trades of various “meme stocks,” leading to an outcry from politicians (Texas senator Ted Cruz and New York congresswoman Alexandria Ocasio-Cortez among them) and other public figures (Barstool’s Dave Portnoy had plenty to say on the subject) accusing the brokerages of illegal market manipulation.
So what does any of this have to do with NBA legend Michael Jordan? Turns out Gabe Plotkin, founder of Manhattan hedge fund Melvin Capital, owns a stake in the Charlotte Hornets, which he purchased from Jordan in 2019. Plotkin’s firm was one of several affected by this week’s events, taking massive losses with fellow hedge fund manager Steve Cohen—who recently purchased a controlling stake in MLB’s New York Mets—ultimately contributing $750 million to keep Melvin afloat.
Per Tyson Otto of Australian news outlet News.com.au, Jordan had recently considered selling more of his Hornets ownership shares with rumblings Plotkin and business partner Daniel Sundheim could even buy the team outright from the Hall-of-Famer. That would seem unlikely now with Melvin needing bailouts from Cohen and Kenneth Griffin, founder of New York-based hedge fund Citadel LLC, to avoid bankruptcy.
“I’m excited to welcome Gabe and Dan as my partners in Hornets Sports & Entertainment,” said Jordan in September of 2019. “While I will continue to run the Charlotte Hornets, make all decisions related to the team and organization and remain the team’s NBA Governor, Gabe and Dan’s investment in the franchise is invaluable, as we continue to modernize, add new technology and strive to compete with the best in the NBA.”
Once Reddit users caught wind of Plotkin and Sundheim’s short-selling strategy, individual investors rallied behind video-game retailer GameStop, with share prices rising by over 1,700 percent at one point. To stop the bleeding, Melvin was forced to close its position on GameStop, resulting in “catastrophic losses.” Meanwhile, Jordan’s net worth has dropped an estimated $300 million in the past year with much of that owing to revenue lost from the ongoing COVID pandemic. Even accounting for those losses, the 57-year-old is still worth over $2 billion.
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