Consistent profits are virtually assured each season due to the NBA’s salary caps, collective bargaining, and revenue sharing.
Additionally, team values continue to rise. The anticipated NBA expansion franchise in Las Vegas is expected to cost the winning bidder $7 billion to $10 billion. Private equity investment will almost certainly be involved. This applies regardless of who leads the acquisition.
This highlights a key trend: private equity has attracted significant investment from limited partners in recent years. This is similar to the sports industry.
Some experts suggest this is a response to the increase in newly wealthy individuals in the US after the pandemic, as they seek new opportunities to invest their capital.
Furthermore, sports are considered a resilient asset class. They are largely insulated from supply chain disruptions and geopolitical tensions. They benefit from the growing experience economy. Franchise-based systems like the NBA encourage collaboration among competitors.
It is not surprising that Bill Foley, a prominent sports investor, is seeking to acquire a controlling stake in the Las Vegas NBA franchise. He also owns the Las Vegas Golden Knights of the NHL. Therefore, he knows better than most the once-doubted appetite for sport in Sin City.
Other properties in his Black Knight Sports & Entertainment holding company include the indoor football team Vegas Knight Hawks and Premier League soccer club AFC Bournemouth.
He is currently expanding his investments further within the sports sector. He completed a deal worth approximately $60m to buy Premiership Rugby club Exeter Chiefs.
While this transaction is much smaller than the potential Las Vegas NBA franchise deal, it ends 155 years of member ownership for the Chiefs, based in southeast England, and underscores Foley’s strong commitment to sports investment.
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Eric Butler is a Contributor for Dice City Sports. You can follow him on Instagram and X via @ReportandOpine
