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The evolution of NBA ownership


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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