League Considers Plan To Let More People Invest In NBA Teams

by September 03, 2019
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Justin Timberlake of the Memphis Grizzlies

The NBA is considering a financial vehicle that could allow new investors to invest in an NBA team or collection of franchises. The vehicle would purchase minority shares of various teams from their current ownership groups and then make them available to others who may not have the capital to purchase a stake in a team otherwise, Scott Soshnik of Bloomberg reports.

The league announced their interest in the idea in a memo sent to each team.

While the exact terms of the proposed structure aren’t known, the idea is that NBA owners could essentially sell minority shares of their franchise which would then be made available through a new fund (or funds) that would then allow external investors to buy in and invest in an NBA team or collection of teams.

Soshnik reports that this is all very much preliminary and that league owners have been asked to weigh in on the idea this week. The idea will be discussed more formally on Sep. 20.

The benefit for NBA team owners would be an influx in capital. While serving as the majority owner of a franchise is a feather in one’s cap, sports franchises aren’t particularly liquid. In other words, owning an NBA team worth north of $2 billion is great and all but the only way to actually get that Scrooge McDuck swimming pool of gold coins, you’d have to sell your team.

Many NBA teams already have minority owners but, as Soshnik writes, even a 5% share in a $2 billion franchise costs $100 million. Considering that a small share like that often doesn’t even come with a board seat or any influence on the organization, it’s a tough sell.

A more palatable offer may be to allow the larger pool of investors to buy in to one specifically designated investment vehicle. Doing so would put additional money in the pocket of those existing NBA owners without them having to sell their whole team and it would let an army of smaller scale investors buy a mostly symbolic token of an NBA franchise.

We’ll be on top of this story as more details emerge after the forthcoming meeting but you may want to start packing away some cash if you’ve ever wanted to roll up to the club as a 0.0000048% minority owner of the Charlotte Hornets.