In a recent statement, Adam Silver, the commissioner of the National Basketball Association (NBA), confirmed that there are currently no plans for sovereign wealth funds to acquire controlling stakes in NBA franchises in the foreseeable future. Speaking at the Associated Press Sports Editors convention, Silver emphasised the league's commitment to having individuals in positions of control who are accountable to fans, partners, and players.
Silver's comments follow the news that Monumental Sports & Entertainment (MSE), the owner of the NBA's Washington Wizards and other Washington DC-based sports franchises, had welcomed the Qatar Investment Authority (QIA), the country's sovereign wealth fund, as a minority investor. However, the NBA's existing investment rules dictate that the controlling owner must own a minimum of 15% of the team, and any sovereign wealth fund can only hold a passive investment of up to 5%.
Valuations of NBA franchises have been steadily increasing, with the average team value reaching approximately $3 billion, a 16% surge from 2021, according to Sportico. The record-breaking purchase of the Phoenix Suns and the Women's National Basketball Association's (WNBA) Phoenix Mercury by Mat Ishbia for $4 billion in December 2022 exemplifies the growing market value of NBA teams.
Acknowledging the limited pool of individuals capable of making substantial investments in teams, Silver noted that the NBA expanded investment opportunities to private equity firms and sovereign wealth funds. He further explained that the investment community recognises the growth potential of NBA franchises and views them as attractive financial assets.
While Silver expressed optimism regarding the NBA's strong position and predicted continued growth for the league's teams, he clarified that the interest from sovereign wealth funds does not currently extend to controlling ownership. Furthermore, he stated that despite significant interest from various markets, NBA expansion is not imminent, although future possibilities, including Las Vegas and Seattle, will be considered in an open process when the time is right.
Silver also addressed Saudi Arabia's involvement in sports investments, characterising it as a "two-edged sword" in light of the merger between the PGA Tour, LIV Golf, and the DP World Tour. He confirmed that no Saudi-backed fund has attempted to invest in an NBA franchise since the league updated its regulations.
As the NBA continues to attract interest from various investment entities, Silver's stance underscores the league's preference for maintaining individual control over teams while welcoming passive investment from sovereign wealth funds. With soaring team valuations and a positive outlook for the future, the NBA remains an attractive opportunity in the sports investment landscape.