The NBA wants teams to be owned by individuals rather than sovereign wealth funds, but NBA commissioner Adam Silver stopped short of ruling out that possibility when speaking at the Associated Press Sports Editors convention on Monday.
‘I don’t want to say what could ever happen, but there’s no contemplation right now,’ Silver said. ‘I mean, it’s very important to us, putting aside sovereign wealth funds, that individuals are in a position to control our teams, be responsible to the fans, be responsible to their partners and to the players.
‘It’s very important to us that there be a person [in charge], and this is independent of sovereign wealth funds. I think that in terms of the connection with the community, the connection with the players and their other partners in the league.’
Currently the NBA bars sovereign wealth funds from owning more than 5 percent of any franchise, and Silver said the league has no plans to change that policy ‘in the foreseeable future.’ Furthermore, the NBA also requires controlling owners to control at least 15 percent of a club, meaning sovereign wealth funds have no current pathway to taking over a league team.
Silver was asked about the subject amid LIV Golf’s controversial merger with the PGA Tour, which critics see as Saudi Arabia’s latest attempt to whitewash its human rights record. Previously the country bought control of English soccer club, Newcastle, through its Public Investment Fund (PIF), which also controls LIV Golf.
Currently NBA commissioner Adam Silver (left) bars foreign investment funds like the PIF from owning more than 5 percent of teams. (right) Newcastle chairman, the PIF’s Yasir Al-Rumayyan
LIV Golf star Phil Mickelson (left) and Saudi PIF governor Yasir Al-Rumayyan (right)
The deal has caught the eye of the United States Senate, which now plans to interrogate several PGA officials during a subcommittee hearing on Tuesday morning.
‘A regime that has killed journalists, jailed and tortured dissidents, fostered the war in Yemen, and supported other terrorist activities, including 9/11. It’s called sportswashing,’ said Senator Richard Blumenthal (Democrat – Connecticut).
‘It is also about hypocrisy, and how vast sums of money can induce individuals and institutions to betray their own values and supporters, or perhaps reveal lack of values from the beginning. It’s about other sports and institutions that could fall prey – if their leaders let it be all about the money.’
Meanwhile, Qatar’s sovereign wealth fund is buying a 5-percent stake in the company that owns the NBA’s Washington Wizards, WNBA’s Mystics, and NHL’s Capitals.
There has not been any reported interest by Saudi Arabia or Qatar in buying an NBA franchise, although there could be such an opportunity in the near future, if and when the league decides to expand.
The NBA is currently finalizing new media rights deals after locking in a new labor deal, but Silver said he expects the league to look into expansion in the near future.
‘We will turn to expansion once those media deals are done,’ Silver said. ‘It’s not a sure thing. But as I’ve said before, I think it’s natural that organizations grow over time. There’s no doubt that there’s enormous interest in this (Las Vegas) market.’
There is also strong support for returning an NBA team to Seattle, which lost the SuperSonics to Oklahoma city in 2008.
Should NBA franchises become available, the league’s asking price is expected to be high, given the recent sales of the Milwaukee Bucks and Phoenix Suns for $3.5 billion and $4 billion, respectively.
Silver acknowledges that its only a few individuals who could afford such a price, and the league previously lifted restrictions on private equity firms buying stakes in teams.
‘In part, the reason why we’ve opened up investment opportunities to private equity firms, sovereign wealth funds, is because we’re running out of individuals, frankly, who are in a position to write those kinds of checks, and especially when you’re not going to be the control owner of the team,’ Silver said.
‘Interestingly enough, those funds are making financial investments in these teams,’ he said. ‘To me, I think the investment community is just following that trend and saying this is a true growth opportunity.
Silver described himself as ‘bullish’ on the opportunity the NBA is offering potential team owners, and refuted the suggestion that franchise valuations are being inflated. In response, Silver pointed to league revenue – which hit $10 billion in 2021-22 – to argue that franchise prices are not the result of a bubble in professional sports.
‘I think a bubble would be indicative of sort of irrational valuations,’ Silver said. ‘I think if you look at the revenues, at least in the case of the NBA being generated by the league, the opportunity for growth, the global market that we’re addressing here, and maybe there’s certain unique aspects to the NBA because of how global our league is.
‘I don’t think there’s anything irrational at all. In part, the reason why we’ve opened up investment opportunities to private equity firms, sovereign wealth funds, is because we’re running out of individuals, frankly, who are in a position to write those kinds of checks, and especially when you’re not going to be the control owner of the team.’
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