SLOWS BAR BQ

Expansion is a big part of the planned changes.

e Slows Holdings team signed a deal with New York-based Mighty Quinn’s Barbecue to come on as a strategic partner and investor. Terms of the partnership and investment were not disclosed.

Established in 2012, Mighty Quinn’s is a fast-casual restaurant chain that began franchising in 2019. It has 12 locations in New York, New Jersey, Maryland, Florida and Dubai. “We have been searching for complementary brands in new markets to strategically increase the scale of our organization,” Micha Magid, co-CEO of Mighty Quinn’s, said in a statement. “We found this opportunity with Slows as a great rst step into the Midwest. Slows shares our vision for community centered great BBQ, a diverse real estate strategy and passionate leadership.”

Phil Cooley on Wednesday told Crain’s that things have changed for himself, brother Ryan and their father Ron.

“If it were 2005, I would’ve been excited to join in (the expansion plans),” Cooley said. “My dad’s almost fully retired. My brother’s got three kids. ere are a lot of factors at play. When we started, I was very passionate about restaurants. Now I do a lot of building and design work. at’s what’s taking up most of my time now.”

Phil Cooley, a 2007 Crain’s 20 in their 20s honoree, is active with building renovation and his nonprofit Ponyride creative incubator

“I have a strong a nity for Slows and all the employees,” Cooley said. “We’ve been less active in the day to day and more active in real estate and nonpro t work. In order to do the things they wanted to do, they don’t need us. We were able to come up with an amicable split.

Bally

From Page 1 e largest debt owed is more than $1.8 billion to U.S. Bank. DirecTV is also listed as a creditor, with Diamond Sports owing it more than $40 million. e ling lists the 30 creditors owed the most debt, but says Diamond Sports has 50-99 creditors. It was unclear if any of the Detroit teams are among those unlisted creditors.

League. Diamond listed $1 billion to $10 billion in assets and liabilities in the Chapter 11 ling.

Diamond in a news release said it and regional sports networks including Bally Sports would continue broadcasting games as normal and it would seek court support to continue operating as usual during bankruptcy proceedings. Diamond’s regional sports networks produce about 5,000 live local professional telecasts each year in addition to a wide variety of locally produced sports events and programs.

A spokesperson for the Detroit Pistons, owned by private equity billionaire Tom Gores, directed a request for comment to the NBA league o ces.

NBA spokesperson Mike Bass told Crain’s in an email that Diamond’s bankruptcy ling was expected and the league remains committed to ensuring that NBA fans in the markets served by Bally Sports have continued access to all local games.

Inquiries seeking comment from the Tigers and Red Wings were not immediately returned. e Tigers and Red Wings are owned by the Il-

“Our kids go to the same school. We live in the same neighborhood. is took some time, but we wanted to make sure we were all able to be successful.”

Still, Slows Holdings’ partnership with the Cooley brothers is not 100 percent over. e Cooleys own the buildings that house the Corktown restaurant and 4107 Cass Ave., home of Slows takeout location Slows to Go. Slows Holdings signed new ve- itch family, who also own Little Caesars Pizza, multiple entertainment venues and real estate developments in Detroit. e Tigers are not in that group. In 2018, Tigers ownership said it was considering launching a sports network of its own to air games, as Crain’s reported at the time. In 2021, Crain’s reported that the Ilitch organization had reserved ve company names related to a regional sports network under consideration for years.

Major League Baseball has said it would stream games for free for about six teams a ected by the bankruptcy.

By ling for bankruptcy, Diamond said it intends to separate its business from Sinclair and become a standalone company. Sinclair loaded up on debt to buy 21 regional sports networks from Walt Disney Co. in 2019 for $9.6 billion.

“ e (restructuring agreement) will further provide that Diamond’s rst lien lenders will be unimpaired, while Diamond’s other secured and unsecured creditors will equitize their debt in exchange for equity and warrants issued by reorganized Diamond,” it said in the statement. “Sinclair is expected to continue to provide management services during the proceeding and to provide transition services for a period after Diamond emerges from Chapter 11.”

In the ling, Diamond said it has about $425 million of cash on hand to fund its business and restructuring.

According to the petition, the regional sports networks are also ling separate bankruptcy petitions.

Cooley is a general contractor for the real estate company.

“ e Cooleys have a lot of other businesses. ey’re very established in real estate. We’ve been talking about this for a couple of years — from the initial discussions on how to proceed as a company, to then the Cooleys deciding they would sell if we found an investor, to working out details that work out for everybody.” at includes sta . for entire neighborhoods. We have good sales gures from that, and that will inform us on future decisions regarding brick and mortar.”

Terry Perrone said Slows general managers, all of whom have been with the company for at least ve years, were made aware of the change in advance. Management and key sta were told the news Wednesday. He doesn’t anticipate much if any sta turnover among the more than 130 Slows employees.

Keeping sta on and building its ranks will be key if expansion plans are to come to fruition.

In addition to the Detroit locations, Slows has a restaurant in Grand Rapids and a concession stand inside Huntington Place in downtown Detroit. During the 2021-22 basketball season, it operated a food stand inside Crisler Arena at the University of Michigan during men’s games. Slows also introduced a food truck during the pandemic.

Slows Holdings plans to open new locations in undisclosed locations in Southeast Michigan. First, though, is the build-out of a second food truck. Slows used its food truck at 120 events last year, which brought in more than $300,000 in revenue.

Slows revenue overall has rebounded since the start of the pandemic. Revenue was up 30 percent in 2022 from 2021, when revenue fell 40 percent-50 percent from pre-pandemic levels. Terry Perrone did not disclose nancials for a dismal 2020, when restaurants were forced to close down for weeks and limit dine-in service amid the rst year of the pandemic.

“A mitigating factor for the drop is hours of operation. We were open limited hours most of 2021,” he said. “We’re starting to see that liveliness and excitement again from our customers.” year leases with automatic renewals on both Detroit spaces.

It’s an exciting time for the new owners. Some menu changes and minor renovations are on the horizon, according to Brian Perrone, along with the addition of a line of retail products.

“We’re thrilled with how everything has gone,” Terry Perrone said. “I can’t emphasize how much we’re excited about what’s happening in Corktown with Ford and everything else. Corktown has changed a lot. When you think about what you see there with the activation of the (Michigan Central Station) and everything else, we’re very excited.

“Essentially, the gist of the sale is the Cooleys remain our landlords,” Terry Perrone told Crain’s. “ ings have gone smoothly. It helps when you’ve been partners for 20 years. Any success we have going forward, they’ll be rooting for us.”

Ryan Cooley owns and operates Detroit-based O’Connor Real Estate, which he purchased in 2004. Phil

“We are utilizing this process to reset our capital structure and strengthen our balance sheet through the elimination of approximately $8 billion of debt. e nancial exibility attained through this restructuring will allow DSG to evolve our business while continuing to provide exceptional live sports productions for our fans,” David Preschlack, CEO of Diamond, said in the release. “DSG will continue broadcasting games and connecting fans across the country with the sports and teams they love. With the support of our creditors, we expect to execute a prompt and ecient reorganization and to emerge from the restructuring process as a stronger company.”

In its ling with the court, Diamond is seeking a variety of “ rstday” relief options, including authority to pay employee wages and bene ts and honor customer programs in the ordinary course of business and without disruption.

In addition to Detroit, Diamond has 18 more owned-and-operated regional sports networks around the country. ose networks serve as the TV home to more than half of all MLB, NHL and NBA teams based in the United States. Diamond Sports Group also has a joint venture in Marquee, the home of the Chicago Cubs, and a minority interest in the YES Network, the local destination for the New York Yankees and Brooklyn Nets.

Diamond has nearly $1 billion in rights payments, mostly to baseball teams, due in the rst quarter this year. e company is current on pay-

“ e food truck was a lifesaver. It’s been great for us,” Terry Perrone said. “In the peak of COVID-19, we put the truck at Cherry Hill Village in Canton, and there was a three-hour wait for food. People were ordering food for themselves and their neighbors. We realized we could run a traditional food truck there, and do pre-orders with family-sized meals. We were able to o er more catering ... to a point where we did catering events ments to hockey and basketball teams, but it might withhold payments from some baseball teams where it is trying to renegotiate a better deal.

Major League Baseball has set up a local media department in case it has to take over broadcasts for teams. Games would air locally via MLB Network or be streamed on MLB.TV in case that happened.

“Diamond Sports Group’s bankruptcy declaration today is an unfortunate development that we have been expecting. Despite Diamond’s economic situation, there is every expectation that they will continue televising all games they are committed to during the bankruptcy process,” MLB said in a statement late Tuesday night. “Over the long term, we will reimagine our distribution model to address the changing media climate and ultimately reach an even larger number of fans.”

As its traditional broadcast business struggled with the decline in pay television subscribers and the COVID-19 pandemic curtailed live sporting events, Diamond planned to stake its future on its own direct-to-consumer service, which launched last year after lenders provided the company with additional capital.

Diamond’s nancial struggles are a bad omen for the industry at large, given the amount of revenue from media rights in uences how much players get paid, among other things. As the pay-TV business contracts, some sports and media executives are warning that teams and leagues

“Nimbleness is something that’s served us well the last few years. e food truck, vending at (University of Michigan Hospital), UM basketball games. We leaned into things like take and bake. Being nimble — that’s what you’ll see going forward. We’ll have a blend of brick and mortar, but we’ll also continue with the alternative revenue streams. We want to continue to re ne the experience at our dine-in locations, but as far as the food, you’ll be able to get that experience everywhere.”

Contact: jason.davis@crain.com (313) 446-1612; @JayDavis_1981 will need to accept smaller rights payments going forward.

One positive for fans that could come from the move is the possible loosening of league blackout rules. Games airing on streaming services like MLB.TV and NBA League Pass are blacked out in local markets. If Bally’s can no longer broadcast games, that could change, giving fans another avenue to watch their favorite teams. Blackout rules are privately negotiated by the leagues and their broadcast partners, following the FCC repealing its blackout rules in 2014.

Diamond Sports isn’t the only company experiencing nancial woes with its regional sports networks. Warner Bros. Discovery, which has an ownership stake in three of the AT&T SportsNet networks, has given the Colorado Rockies, Houston Astros and Pittsburgh Pirates until March 31 to reclaim their broadcast rights. WBD Sports is ending its investment in the networks.

Paul, Weiss, Rifkind, Wharton & Garrison LLP and Wilmer Cutler Pickering Hale and Dorr LLP are serving as Diamond’s proposed legal counsel and AlixPartners LLP is serving as its proposed restructuring adviser. LionTree Advisors LLC and Moelis & Company LLC are serving as the company’s investment bankers, and Reevemark is serving as communications adviser to the company.

— Bloomberg and the Associated Press contributed to this report.

Contact: jason.davis@crain.com

(313) 446-1612; @JayDavis_1981

“ e No. 1 business we’re all in is (managing) risk. We should never predict the future. And the answer to that is diversi cation,” he said.

Other executives at Michigan community banks — institutions generally with less than $1 billion in assets, placing them on the much smaller side of the banking world — o ered a similar critique as Lamb.

At Chelsea State Bank, a community bank in western Washtenaw County with about $425 million in assets, “discipline” is the name of the game, according to President and CEO Joanne Rau, who said that calls from concerned customers have been few.

“For us, there aren’t big red ags in front of us,” Rau said of the recent events. “While customer needs may change, staying true to the fundamentals of banking are essential.”

Banks in Michigan’s small towns like Chelsea and Oxford play in a very different world than a bank like Silicon Valley Bank. While the 16th largest bank in the country with over $200 billion in assets, SVB was still very much just a regional bank.

Because SVB had less than $250 billion in assets, it fell short of many of the regulations put in place under the Dodd-Frank Act, which today largely polices just the largest banks in the country.

Attempts by Crain’s to interview executives with many of the larger regional banks operating around Michigan were unsuccessful. Spokespeople with banks including Comerica, PNC, Huntington, Fifth ird and others either did not respond to interview requests Wednesday and ursday or said executives were unavailable.

Spokespeople with Huntington and Fifth ird — both headquartered in Ohio, but each among the largest banks operating in Michigan — provided separate statements saying their operations have been una ected by the recent events and the banks see no indication of the troubles that have befallen Silicon Valley Bank and others.

Dallas-based Comerica, another large regional bank with a signi cant Michigan presence, has been listed by Moody’s Investor Services as one of a handful of banks the ratings agency is reviewing for potential trouble. e ratings agency has cited concerns over the lenders’ reliance on uninsured deposit funding and unrealized losses in their asset portfolios.

A Comerica spokesperson last week took issue with the bank’s presence on the list of banks being reviewed by Moody’s, writing “that any correlation between Comerica and the recently impacted banks in regard to deposits is an apples-to-oranges comparison.”

Taking a step back, while being careful to not “underestimate the interconnectedness” of the global nancial system, Nick Juhle said he believes the instability being experienced is likely to be relatively con ned.

“ ere’s plenty of uncertainty out there,” said Juhle, the chief investment o cer of Greenleaf Trust, a Kalamazoo-based trust bank and wealth manager with o ces around the state. “But a repeat of the global nancial crisis? at still seems like a little bit of a stretch to us.”

Finding balance

So where does the trouble lie?

At least in the case of Silicon Valley Bank, the issue appeared to be an over-reliance on deposits from the tech sector and poor risk management that failed to see the diminishing value of

Michigan’s #1 Financial Advisor by both Barron’s* and Forbes**

Charles C. Zhang

CFP®, MBA, MSFS, ChFC, CLU Founder and President assets acquired with those deposits. An announcement by the bank that it needed a capital injection led to a bank run and the ultimate collapse March 10, which ended with regulators taking over the bank and ultimately guaranteeing all deposits.

Such a business model is vastly different at a lender like Oxford Bank, its CEO said.

“ e di erence in community banks is we’re very granular,” Lamb said. “Our customers are granular. We can’t be concentrated in deposits.” e goal, according to Lamb, is to “balance” between liabilities — loans — and assets. e statement from Fifth ird Bank, sent to Crain’s on ursday, also alluded to increased deposits and new customers opening accounts, but a spokesperson did not provide an amount.

“If the world changes on you, you don’t have one side or the other reprice on you,” he said, referring to how the value of both can change, largely from interest rate uctuation.

Still, the tumult has led to some opportunity for banks, particularly larger ones, such as Bank of America. A Bloomberg report last week said the Charlotte, N.C.-based bank had mopped up more than $15 billion in new deposits in a matter of days, emerging as one of the big winners after the collapse of three smaller banks dented con dence in the safety of regional lenders.

Lamb told Crain’s that deposits at his bank have been “consistent with previous weeks,” and noted that’s what he has heard from colleagues in the smaller community banking space.

Like others, Rau with Chelsea State Bank expressed a general sense of optimism for conditions going forward, but acknowledged an economic downturn is likely in the coming months.

“Do I think a recession is in sight? All the investment banks have been talking about this for a year and a half,” Rau said. “I do believe we’ll likely be in a recession, but I don’t think it will be a hard landing like 2008 or 2009. Maybe that makes me a little naive, but looking at where we stand in Southeast Michigan, I feel pretty good. But I’m cautious as well.”

‘A void’ in the startup space

Beyond the banking world, other industries are also closely monitoring the instability in nancial markets. at’s particularly true in venture capital, an industry that had a close relationship with Silicon Valley Bank going back decades prior to its collapse and government takeover.

Much of Silicon Valley Bank’s book of business was tied to banking services tailored to the needs venture capital funds and their portfolio companies.

Farmington Hills-based Beringea — the state’s largest VC fund with about $750 million in assets under management, according to Crain’s data from 2021 — did have portfolio companies unable to access money following the bank run at SVB, according to Michael Gross, Beringea’s managing director. e rst step that executives at Beringea are taking, Gross said, is “tactical” changes and changing up the fund’s “treasury strategy” to ensure holdings aren’t overly concentrated at any one bank.

But at a larger level, the death of SVB — which has yet to secure a buyer — is something that will likely create challenges for startups and investors going forward, he said. One of the key services the bank provided was debt lending to startups, essentially bridge capital a company could raise to tide over operations in between equity rounds.

“While it wasn’t venture lending that caused the (collapse of SVB), the outcome is venture lending will get tougher to secure, or go away all together,”

Gross told Crain’s, noting that the overall landscape for venture capital investment has cooled amid the period of higher interest rates. “ at will leave a void in the industry at a time when it’s critical for companies.” e goal for many of his clients — which range from bars and restaurants to manufacturers and professional service companies — and are largely “doing quite well,” he said — is to focus on “hardening their business” to provide as a hedge against the types of events that have played out over the last week or so.

Small business consultants told Crain’s that their clients are taking notice and watching the bank instability, but it’s “front page stu ” like interest rates, in ation and nding workers that continue to be the largest challenges, according to Brooks Kindel, a business growth consultant with the statewide Michigan Small Business Development Center, housed with the Seidman College of Business at Grand Valley State University.

“ ey’re trying to reduce risk, reduce debt, re unpro table customers,” Kindel said. “ ey’re trying to do all the things you need to do to protect your margins. at helps provide a sense of a little more calm or condence.”

— Bloomberg contributed to this report.

Contact: nmanes@crain.com; (313) 446-1626; @nickrmanes

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