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The evolution of NBA ownership

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NBA owners recently voted to permit sovereign wealth funds, pension funds and university endowments to purchase shares of teams, vastly expanding the league’s pool of potential investors.

Why it matters: NBA ownership, once reserved for uber-rich individuals, is increasingly becoming just one other investment vehicle — albeit a really expensive one.

The backdrop: The NBA became the primary U.S. league to permit private equity funds to take a position in teams — a change designed to offer liquidity options for minority owners and help finance team sales.

  • The NHL, MLB and MLS soon followed suit, and funds like Arctos and Dyal have been snatching up shares ever since.
  • Last month’s vote, which got here while the Suns are actively up on the market, merely increased the variety of potential investors.

How it really works: Individual funds cannot own greater than a 20% stake in a single team, and franchises cannot have greater than 30% of their total equity held by funds, per Sportico.

  • Funds can also’t hold any governance rights with their team. It’s meant to be a passive investment.
  • The league will review all potential investments, considering such aspects as human rights records and geopolitical standing.

By the numbers: Making these funds eligible for NBA investment dramatically increases the general capital within the marketplace.

  • The world’s 100 biggest pension funds and 100 biggest sovereign wealth funds combined are price over $27 trillion, and university endowments total nearly $700 billion.
  • The world’s billionaires are collectively price just $12.7 trillion by comparison, down $400 billion amid the past yr’s economic turmoil.

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