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Pension and Sovereign Wealth Funds Can Now Invest in NBA Teams

By Brandon Sapienza

 The National Basketball Association will let, pensions and endowments acquire passive stakes in its teams, opening up to investors who manage assets that by some estimates exceed $30 trillion.

NEW YORK, NY – MARCH 12: An NBA logo is shown at the 5th Avenue NBA store on March 12, 2020 in New York City. The National Basketball Association said they would suspend all games after player Rudy Gobert of the Utah Jazz reportedly tested positive for the Coronavirus (COVID-19). (Photo by Jeenah Moon/Getty Images)

The NBA’s board of governors voted to approve such investments, though any buyer would still be subject to league review and board approval, spokesperson Mike Bass said. 

The move extends the NBA’s push to get more institutional investors involved in team ownership. In recent years it permitted private equity firms to hold stakes, including setting up a deal in 2020 for Blue Owl Capital Inc.’s Dyal HomeCourt Fund to be able to take minority interests in multiple franchises. It now has positions in the Atlanta Hawks, Phoenix Suns and Sacramento Kings.

Sovereign wealth funds held about $10.5 trillion as of the end of 2021, a record high, while public pension funds had $21.4 trillion, according to data from Global SWF. The richest university endowments in the US, which often seek long-term investments, are also flush with cash.

Adding passive investments from large funds can also boost the pool of future prospective team owners. The value of NBA franchises has soared in recent years, making ownership increasingly out of reach except for the very wealthiest people. 

The average NBA team is worth $2.58 billion, according to Sportico, which earlier reported on the league’s plans. 

Robert Sarver, owner of the Phoenix Suns and Mercury, said in September that he was starting to seek buyers for the NBA and WNBA franchises amid mounting pressure to step down after an investigation found he used racist slurs and harassed female employees. Sportico values the Suns at $1.9 billion.

More stories like this are available on bloomberg.com.

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