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Wednesday, June 19, 2024

NBA Team Stakes Now Open to World’s Largest Funds

  • NBA owners voted to allow pensions, endowments, and sovereign wealth funds to buy minority stakes in teams.
  • The league opened the door to private equity investments in 2020.
Portland Trailblazers forward contests Los Angeles Lakers shot
Kirby Lee-USA TODAY Sports

The NBA is opening its doors to some of the world’s biggest pools of money.

League owners voted to allow sovereign wealth funds, pensions, and endowments to buy minority stakes in teams.

  • Any investment must receive approval from the league’s board of governors. 
  • The league has said that human rights and geopolitical standing will be factored into these decisions, which could affect potential investment from notable funds such as Saudi Arabia’s Public Investment Fund.
  • The league’s new rules only permit passive investments.

Public pension funds held around $21.4 trillion in 2021, while sovereign wealth funds held roughly $10.5 trillion. The NHL is reportedly likely to follow the NBA’s lead in allowing institutional investors.

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Private Party

The NBA began allowing private equity investors to buy limited team stakes in 2020. Private equity firms may own up to 20% of a franchise, and no investment fund may own more than 30% of a team.

Arctos Sports Partners holds stakes in the Golden State Warriors, Sacramento Kings, and Harris Blitzer Sports & Entertainment, the parent company of the Philadelphia 76ers and New Jersey Devils.

Dyal HomeCourt has pieces of the Phoenix Suns, Atlanta Hawks, and the Kings.

The investments allow owners to partly cash in on rising team values without giving up control of their franchises.

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