New NBA Investors?

NBA ownership might be within reach for a new batch of investors.

As team valuations continue to rise, the league is looking to expand its potential investor base by turning to private equity. NBA owners have agreed to plans to allow investment funds to buy into franchises. 

There are reportedly limits, however:

• Private equity and other investors may own up to 20% of each franchise
• Funds may own stakes in no more than five teams
• Franchises cannot have more than 30% of equity held by investment funds

“This provides the NBA, its member teams, its entire infrastructure with financial optionality,” said Chris Lencheski, chairman of private equity consulting company Phoenicia. 

One fund was already approved for ownership last spring. Dyal Homecourt Partners hopes to raise $2 billion to invest in a portfolio of NBA teams, then sell those limited partnerships to private investors. 

Dyal and Owl Rock, an investment firm, merged with SPAC Altimar Acquisition Corporation in December. The combined firms are now called Blue Owl and plan to trade on the NYSE later this year, meaning public investors can effectively own shares of the NBA fund. 

While it’s not clear how Blue Owl expects to make a return on NBA limited partnerships, NBA Commissioner Adam Silver is confident that investors will be intrigued in the market.

“Part of it is financial,” he said, “but part of it is the amenities, and the cachet, and the desire to be directly involved with these leagues.”