LAS VEGAS — NBA commissioner Adam Silver said Monday that there is no pathway “in the foreseeable future” for sovereign wealth funds to become the controlling owners of an NBA franchise.
“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 the Associated Press Sports Editors convention here in Sin City. “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.”
Under the NBA’s current investment rules, the controlling owner of an NBA team has to own at least 15 percent of the franchise, and any sovereign wealth fund can only have a passive investment in a team of no greater than five percent.
Last month, Qatar’s sovereign wealth fund purchased a five percent stake in Monumental Sports and Entertainment, giving them stakes in the NBA’s Washington Wizards, WNBA’s Washington Mystics and NHL’s Washington Capitals. And one of the biggest stories in North American sports over the first half of the 2023 calendar year has been the potential merger of LIV Golf, which is funded by Saudi Arabia’s Public Investment Fund, and the PGA Tour.
In recent months, both the Milwaukee Bucks and Phoenix Suns exceeded the previous records for franchise valuations in their recent sales, with Marc Lasry’s stake in the Bucks going for $3.5 billion in March and Mat Ishbia purchasing the Phoenix Suns from Robert Sarver for $4 billion in a sale that went through in February.
Those valuations skyrocketing in recent years played a part in the NBA opening up the ability for private equity firms and sovereign wealth funds to purchase stakes in teams. According to Silver, there are fewer and fewer individuals capable of writing those checks. But he also argued that those valuations are not part of a bubble, saying that the underlying economics of the sports, and the value of live sports in general, validate them.
“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.”
Silver added he believes those entities see the value in buying into the NBA, and buying into the value of live sports, to back up his argument.
“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.
“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.”
Silver also hit on some other topics, including:
– Addressing the criticisms of his decision to suspend Ja Morant for 25 games from the National Basketball Players Association’s executive director, Tamika Tremaglio, by saying that the open-ended nature of the suspension was to come up with a plan that would allow Morant to get back on the court in the best possible way.
“What I didn’t want to then further impose check the box requirements in terms of coming back,” Silver said. “I wanted to come up with a program that was mutually agreeable in terms of him getting his life in order before he returns to NBA basketball. And as I understand it, he is continuing to seek help. And I know there’s enormous pressure that comes with an NBA player, particularly a superstar player. So I’m certainly empathetic to the pressures he faces.
“But I also feel particularly around guns and the gun violence we’re seeing among young people in our society that this is something we have to take incredibly seriously. This is not an attempt to weigh in on what the appropriate gun restrictions should be. This is about gun safety. And again, from my time we initially met, we seem to be in agreement on how serious an issue this is.”
– Silver again reinforced that, while expansion isn’t a certainty, it’s at least a strong possibility.
“It’s not a sure thing, but as I’ve said before, I think it’s natural that organizations grow over time,” Silver 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.”
– Silver praised the maturity of No. 1 overall pick Victor Wenbanyama for how he’s handled everything that’s been thrown at him over the past several weeks, adding he was pleased Wenbanyama bounced back from a disappointing first game Friday with a strong showing Sunday against Portland before being shut down by the Spurs for the rest of summer league.
“I’ve had the opportunity to spend time with him in New York around the draft,” Silver said. “I also met him when we played a regular season game in Paris in January, and my initial reaction is that he’s an incredible young man. I almost don’t even want to caveat it with young man because he seems just to be an incredible person. [He’s] mature beyond his years, worldly, cultured, thoughtful, and also the potential to do amazing things in this league.”