Investor Says He Sold Stake in Warriors Because Competition Is Coming for NBA

Former Warriors minority owner and venture capitalist Chamath Palihapitiya sparked quite a bit of social media speculation on X/Twitter on Monday after saying why he sold his stake in the team in 2022. 

He thinks the NBA has some competition coming in its near future. 

Palihapitiya replied to a post from Adam Loewy, a Texas attorney, who was praising Chris Kratovil, another attorney in the Lone Star state, who weighed in on the Mavericks’ stunning decision to trade Luka Dončić to the Lakers. 

In a 12-part premise, Kratovil outlined a theory that the Mavericks dealt away a generational talent to intentionally tank the team as a leverage play to dampen interest in the team and ultimately relocate it if Texas doesn’t make sports gambling legal. 

The Mavericks are owned by the Adelson family, which also owns casino company Las Vegas Sands, and since they bought the team from Mark Cuban in 2023 there’s been increased talk of legalizing sports gambling in Texas—and with that the possibilities it could bring to American Airlines Center, where the team plays, and its surrounding area. 

Palihapitiya, whose net worth is $1.2 billion according to Forbes, jumped off Kratovil’s reasoning to explain his divestment from the NBA. 

“I sold my ownership in the Warriors last year, in part, because I was pretty sure competition for the NBA was coming a la LIV Golf vs PGA,” Palihapitiya said on X. “The (speculated) antics below only reinforce the likelihood that a group of well heeled investors with $5-10B could quickly stand up a competitor to the NBA. After this trade, they may want to start with Luka and pay him his supermax and get LeBron by making him the commissioner.”

Palihapitiya later posted a follow-up post that outlined what he had in mind for a foreign basketball league that competes with the NBA. 

Palihapitiya’s tweet comes at a time when both NBA commissioner Adam Silver and Maverick Carter, LeBron James’s longtime business partner, are separately exploring professional sports leagues in Europe. Carter is seeking to raise $5 billion from private investors to start a league, which fits Palihapitiya’s original point. 

For context, the NBA salary cap for each team this season is $140 million. In Palihapitya’s competitor league proposal, teams would spend 3.5 times more than NBA teams do now with help from the league’s massive media rights deal, nearly 80-year history, fanbase, etc. But Palihapitiya’s points of a $10 million per year minimum and no limit on max contracts to help lure big names across the pond are fundamental to what a startup league would need to command the subscribers, advertisers and dollar figures the venture capitalist floats. It’s similar to Major League Soccer’s luring of Lionel Messi with a $150 million contract and the domino effect it’s had on the league.

Palihapitiya was part of Joe Lacob’s investment group that paid $450 million for the Warriors in 2010 for $450 million. He paid $25 million for 10% of the team and sold his stake in 2022 for $520 million, a nearly 2,000% return on investment. The Warriors are currently worth $8.8 billion, according to Forbes. 

Jazz owner Ryan Smith came to the NBA’s defense and responded to Palihapitiya, disagreeing with his take on the state of the league. 

“Having ownership stakes across 4 pro sports leagues, I couldn’t disagree more,” Smith said. “The NBA’s future and reach is the brightest it’s ever been. The global player movement & adoption along with a strong mobile experience is differentiated. Plus the willingness to innovate and change whether it’s the in season tournament, rule changes, new digital TV deals, etc. The NBA doesn’t stay static.”