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The NBA, one of the fastest growing leagues in the world in terms of popularity, is also one of the most valuable. The average franchise is worth $4 billion, according to the latest Sportico team valuations.
That’s great for team owners, of course, but it comes with its downsides—mainly, it’s increasingly hard to find other owners when a team goes up for sale. There are probably only 500 people in the world rich enough to buy a franchise up front, based on billionaire rankings published by various outlets. Some of those billionaires already own NBA squads, such as Miriam Adelson, who recently bought control of the Mavericks from Mark Cuban, while others—Bill Gates, Warren Buffett and Elon Musk, to name a few—have shown no desire to own a sports team.
For that reason, leagues around the world have started embracing private equity, a specific kind of investment fund that only started craving sports in the past two decades.
Is private equity allowed to own NBA teams?
Private equity funds are allowed to own parts of NBA franchises, but not control them.
In 2020, the NBA owners voted to allow one private equity fund to buy limited partner stakes in franchises. That fund, Dyal HomeCourt, is now a part of the Blue Owl GP Strategic Capital Fund after a merger, but it is believed it still operates under its original NBA agreement. Blue Owl is allowed to take minority equity positions in at least six franchises—perhaps more—and shares part of the fees it charges clients and some of the profits it makes with the league.
In 2021, the league approved private equity funds beyond Blue Owl to include other firms, such as Arctos Partners, which specializes in investing in minority sports team stakes. These other funds operate with a bit more restrictions—mainly they are limited to owning stakes in a maximum five teams. These funds are also limited to 20% ownership in any team, which also comes with fewer rights than the typical limited partner.
What teams have private equity investors?
At least six franchises have private equity minority owners.
- The Sacramento Kings (Blue Owl Fund, Arctos Partners)—The Kings are the only team known to have two funds as co-owners. In 2021, Sportico reported that the two funds combined own about 22% of the franchise, 17% by Arctos and 5% by Blue Owl.
- Atlanta Hawks (Blue Owl Fund)
- Golden State Warriors (Arctos)
- Minnesota Timberwolves (Blue Owl Fund)—Blue Owl is part of the Alex Rodriguez and Marc Lore-led group trying to buy the majority of the franchise. The sale is under dispute and is in arbitration.
- Philadelphia 76ers (Arctos)—Arctos is invested in the parent company that owns the 76ers, Harris Blitzer Sports & Entertainment.
- San Antonio Spurs (Sixth Street)—A third fund, Sixth Street, bought 20% of the Spurs in 2021, entering the team along with billionaire Michael Dell, who bought 10% at the time.
- Utah Jazz (Arctos)
Blue Owl sold an earlier stake in the Phoenix Suns for a 158% profit when Matt Ishbia bought the team. It’s not known if there is any PE firm invested in the team under Ishbia’s ownership.
Since there is no disclosure requirement to sales of minority equity in teams, there could be other funds invested in the NBA and other teams that have welcomed institutional co-owners into the fold. Regardless, no franchise is allowed to sell more than 30% of its equity to institutional investors such as PE.
What other types of funds can and can’t own NBA teams?
In 2022, the NBA voted to allow other institutional funds to buy small slices of franchises, including funds such as university endowments, pension funds and sovereign wealth funds. Collectively with private equity, those groups control perhaps $188 trillion in assets globally, according to the investment company institute, making for a deep pool of potential investors. In 2023, one pension fund, OMERS, for Ontario municipal employees, purchased an undisclosed minority stake in Maple Leaf Sports & Entertainment, which owns the Toronto Raptors, among other sports teams.
The NBA implemented ownership limits which are said to be about the same on those funds as with PE, though it is less clear if a non-PE fund can own stakes in multiple franchises. As with every fund investment in a team, the NBA has the option to approve or reject buyers on an individual basis.