Dyal Ushers In New Era of NBA Team Investments

Dyal HomeCourt Partners, the only private equity fund pre-approved by the NBA to invest in multiple franchises, is beginning a funding wave that signals a new era in the league.

HomeCourt will purchase less than 5% of the Phoenix Suns through Dyal Capital, a division of BlueOwl. The investment values the Suns at $1.55 billion — four times owner Robert Sarver’s initial investment in 2004.

The agreement was a few years in the making.

• The NBA sent a memo in March of 2019 to owners exploring “a new capital vehicle that could purchase passive, minority ownership interests across multiple NBA teams.”
• In May of 2020, the league reportedly courted Dyal to build a fund to acquire stakes in NBA teams. Dyal had $23 billion in assets at the time and looked to raise $2 billion for the fund. 
• In January, the NBA reportedly agreed that private equity firms and other investors may own up to 20% equity in a single franchise, but no more than five teams. No single franchise can have more than 30% of its equity owned by private equity firms.

The Golden State Warriors were the first NBA team approved to sell a piece of the team to a private equity firm (Arctos Sports Partners) for 5%. 

Dyal may have more investments in mind. The firm says it can invest in an unlimited number of NBA franchises — it had term sheets for six NBA teams in February. People familiar with the agreement say Dyal’s restrictions are broader than other firms. 

BlueOwl had roughly $52.5 billion of assets under management as of March 31, 2021.