• Loading stock data...
Thursday, February 29, 2024

Sin City’s NBA Ambitions

  • Last Vegas recently added an F1 race and revealed plans for a $3 billion entertainment venue.
  • The city is gearing up to be a major player in the sports scene.
Design: Alex Brooks

Wednesday was a busy day for Las Vegas. For starters, Formula 1 officially announced its third race in the United States, airing live from the Strip in November 2023.

On top of that, new broke that Oak View Group — the U.S.-based global sports and advisory investment firm — has purchased 25 acres just south of the Strip, with plans to build a 20,000-seat arena, hotel, and casino and help turn Las Vegas into the “sports capital of the world.”

The development will be “NBA ready,” according to Oak View CEO Tim Leiweke.

These moves are in line with recent trends. Over the past five years, Vegas has added the following to its portfolio:

  • 2021: NLL expansion team (TBA)
  • 2020: NFL’s Las Vegas Raiders
  • 2018: WNBA’s Aces
  • 2017: NHL’s Golden Knights

Las Vegas is also rumored to be the home of Major League Soccer’s 30th team and a potential suitor for the Oakland Athletics in the event that the latter’s Howard County issues persist.

As Vegas builds up its sports infrastructure and evolves from a gambling and entertainment capital into a sports destination, here’s how the city’s latest nest projects will help along that process.

Oak View’s Big Bet

Oak View is no stranger to development projects. The Los Angeles company run by Leiweke, a former AEG executive, controls the world’s largest membership alliance for venues.

Aside from the alliance — which spans 34 world-class venues, 50 professional sports teams, and 169 million high-discretionary-income fans — Oak View Group has been increasingly involved in actual project development for teams and leagues.

The firm’s most recent efforts include:

  • Leading the $1.15 billion rebuild of Seattle’s Climate Pledge Arena
  • Partnering with UBS for the $1.5 billion buildout of Belmont Park in New York and new arena for the New York Islanders
  • The development of Austin’s 15,000-seat Moody Center, built primarily for concerts

According to a Bloomberg report, Oak View has acquired 25 acres in Clark County and plans to build a $3 billion sports and entertainment district 10 minutes from the Las Vegas Strip, adjacent to the new high-speed rail station.

The complex’s arena alone is expected to cost $1 billion, but no professional sports franchise has committed to it just yet.

The logical move would be for the venue to host an expansion NBA franchise, building upon the city’s existing relationship with the NBA, as it already hosts NBA Summer League and the WNBA’s Aces.

However, in an interview with CNBC, Leiweke said that the project will be able to generate substantial revenues even without a flagship team associated.

The Economics of Expansion

The NBA’s largest source of revenue comes from its national media deals.

The league’s current media rights package runs through the 2024-25 season and pays the league an annual fee of approximately $2.6 billion. That represents roughly $87 million in media rights revenues per year for each of the 30 teams.

But the addition of an expansion team changes the arithmetic.

In the NBA, an expansion franchise is akin to a new team purchase, but the prospective buyers are buying the team from the league itself. When a new ownership group buys in, the sale price is distributed to the 30 teams that make up the league in the form of a one-time balloon payment. 

While the one-time payment might seem attractive, there are potential ramifications.

The more teams that share media rights revenues, the less each individual team makes. The addition of expansion teams has the potential to water down the value of national rights deals for existing teams.

National broadcast deals tend to derive most of their value from big-name teams and playoff broadcasts, which remain largely unchanged after the addition of a new franchise.

Implications of Adding Vegas

The best indicator for the value of a franchise comes from precedent transactions. There have been 15 team sales since 2010. These were the top five purchases by price:

  • Brooklyn Nets (2019): $3.2 billion
  • Houston Rockets (2017): $2.2 billion
  • LA Clippers (2014): $2 billion
  • Toronto Raptors (2011): $1.32 billion (as part of a broader purchase of MLSE, which also owns the Maple Leafs)
  • Atlanta Hawks (2015): $850 million

The last NBA franchise to pay the price tag for an expansion team was Charlotte, which doled out $300 million in 2004, only a slight discount to what one of the league’s crown jewels, the Boston Celtics, sold for just one year prior ($385 million).

A Vegas expansion will no doubt come with a hefty price tag, but let’s not assume it fetches a price beyond the $3 billion paid by Joe Tsai for Brooklyn in 2019. If it’s a $2 billion sale, teams in the league would each receive a one-time payment of ~$67 million per franchise.

The NBA’s new media rights deal in 2025 could reach $75 billion over nine years — which comes out to $278 million per team (assuming a 30-team league). However, the addition of one more franchise would also potentially dilute the value of a $75 billion rights deal by $10 million per year for teams.

These numbers are purely illustrative, and with all of that said, I don’t think a minor dilution of media rights payouts will be enough to deter a franchise from descending upon Sin City. If I’m putting my chips on the table, Vegas will be in the NBA spotlight sooner than later.

Copy Link
Link Copied
Link Copied

What to Read

Caitlin Clark

Iowa Star Caitlin Clark Makes It Official: She’s WNBA-Bound

Iowa star Caitlin Clark announced she is declaring for the WNBA draft.
Charlotte Hornets

Hornets Prepared to Pay Beyond City’s $30M for New Practice Facility

New ownership continues to spend money less than a year after buying the team from Michael Jordan.

The Victor Wembanyama Rookie Card Market Hasn’t Matched His Hype

A cooling market and Fanatics autograph deal leaves big-money collectors waiting.

What Is a Clipper? Behind the Scenes of an NBA Rebrand

The NBA team is leaning into its nautical heritage.
podcast thumbnail mobile
Front Office Sports Today

MLB’s Media Mess


Featured Today

Oct 5, 2021; Kansas City, Missouri, USA; Bob Kendrick, president of the Negro Leagues Baseball Museum in Kansas City, points to the lettering outside of the museum Tuesday.

How Do You Keep Negro Leagues Baseball History Alive? Put It in a Video Game

Negro Leagues Baseball Museum attracting increased donations, visits from ‘MLB The Show.’
February 25, 2024

Sham Gods: The Rapidly Growing World of Sports Impersonators on X

Fake Schefters and Wojs, fabricated trade demands, and borrowed profile pictures.
Sep 24, 2023; Oakland, California, USA; A general view of the Oakland Athletics dugout after the game against the Detroit Tigers at Oakland-Alameda County Coliseum.
February 24, 2024

Murky Future: Everything You Need to Know About the A’s Move to Las Vegas

Breaking down one of the most drawn-out, multifaceted sagas in sports.
February 18, 2024

Sabrina-Steph Wasn’t the ‘Battle of the Sexes’—But It Was Part of the Bigger War

The competition could play a factor in increasing the WNBA’s media value.


Powered By

Careers in Sports

Looking for a new job? Check out these featured listings and search for openings all over the world.
Multiple - USA Careers
Multiple - USA Careers
Multiple - USA Careers

RFK Stadium Bill Advances to Senate After Lopsided House Vote

The bill’s passage in the House, with a vote margin of 348–55, indicates strong bipartisan consensus and support for D.C.’s plans.
Oakland A's
February 27, 2024

A’s Will Meet With Oakland Business Group to Discuss Selling Stake in Coliseum

The group made a $115 million offer for the 50% stake in September.
February 28, 2024

Falcons Getting Grass for 2026 World Cup—but Football Ruled Out

Atlanta’s Mercedes-Benz Stadium will install grass for those soccer games to meet FIFA rules

How LivePass is Redefining Ticketing for the Next Generation of Fans

The next wave of ticketing technology.
The A's have shared renderings of its proposed Las Vegas stadium.
February 26, 2024

Nevada Group Prepares Injunction to Block A’s Stadium From Moving Forward

The Nevada State Education Association is preparing an injunction to block the state from carrying out activities toward funding a stadium for the Oakland A’s.
February 25, 2024

Enough for Both? White Sox, Bears Ramp Up Push for Stadium Funds

MLB club begins to escalate its ask for taxpayer dollars.
Superdome Super Bowl
February 23, 2024

Superdome Renovations to Finish in Time for Super Bowl LIX

Renovations will total $500 million and have been ongoing for years.
February 21, 2024

Where Are the A’s Playing Next Year? Let’s Weigh the Options

Highly anticipated decision on MLB team’s temporary home could arrive within weeks.