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NBA’s Adam Silver rules out imminent sovereign wealth fund team ownership

League’s commissioner says there is “no contemplation right now” to allow state-owned funds to control franchises.

11 July 2023 Ed Dixon

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  • “Very important” teams are controlled independently of sovereign wealth funds, says Silver
  • Washington Wizards owner MSE recently confirmed QIA minority investment
  • NBA also not actively engaged in expansion talks amid Las Vegas and Seattle interest

National Basketball Association (NBA) commissioner Adam Silver has said there are no plans “in the foreseeable future” for sovereign wealth funds to take controlling stakes in the league’s franchises.

“I don’t want to say what could ever happen, but there’s no contemplation right now,” Silver said during a question and answer session at this week’s Associated Press Sports Editors convention and reported by ESPN.

“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.”

Silver’s comments come after Monumental Sports & Entertainment (MSE), owner of the NBA’s Washington Wizards and several other Washington DC-based sports franchises, confirmed that the Qatar Investment Authority (QIA), the country’s sovereign wealth fund, had become a minority investor in the company.

The NBA’s current investment rules state that the controlling owner of an NBA team must own at least 15 per cent of the franchise and any sovereign wealth fund can only have a passive investment in a team of no more than five per cent.

NBA franchises are continuing to see their valuations rise sharply, with Sportico last pegging the league average at US$3 billion, marking a 16 per cent increase on 2021. The Phoenix Suns, along with the Women’s National Basketball Association’s (WNBA) Phoenix Mercury, were purchased by Mat Ishbia last December for US$4 billion, a record for an NBA team.

The surge in valuations has resulted in the NBA allowing sovereign wealth funds, endowments and pensions to acquire passive stakes in franchises. Silver stated that move was also prompted by the realisation that there were fewer individuals out there capable of investing large sums into 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,” he said.

Silver added that the interest in franchises highlighted the strong position the NBA was in, while also forecasting further growth for the league’s teams.

“Interestingly enough, those funds are making financial investments in these teams,” he continued. “To me, I think the investment community is just following that trend and saying this is a true growth opportunity.

“So I continue to be, as you might expect, very bullish on the opportunity here. But again, I think if you look at the fundamentals of our sport, if you look at the amount of interests from all these different platforms in carrying live sports programming … I think it’s why we’re seeing a very positive outlook and why at the end of the day those values are representative of the marketplace.”

Last month, Silver had described Saudi Arabia’s ongoing investment in sports as “a two-edged sword” following the merger between the PGA Tour, LIV Golf and the DP World Tour. He also confirmed that no Saudi-backed fund has attempted to invest in an NBA franchise since it updated its regulations.

As well as not opening the door for sovereign wealth fund controlling owners, at least for now, Silver isn’t expecting imminent NBA expansion, though reiterated there was lots of interest.

“It’s not a sure thing, but as I’ve said before, I think it’s natural that organisations grow over time,” he said. “We will look at [Las Vegas]. There’s no doubt there’s enormous interest in Seattle. That’s not a secret. There are other markets that have indicated interest.

“And just for the people who will hear or read about this interview, we are not engaged in that process now. I mean, we’re not taking meetings right now with any potential groups. What we’re saying to everyone privately is the same thing. I’m saying publicly that there’ll be a very open process at the time we’re ready to consider expansion. But that’s not yet the – that’s not now.”

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