Tim BontempsESPN5 minutes of reading
LAS VEGAS — NBA commissioner Adam Silver said Monday there is no way “for 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 consideration right now,” Silver said during a question-and-answer session at the Associated Press Sports Editors convention. “I think it’s very important for us, putting aside sovereign wealth funds, that individuals are able to control our team, be accountable to the fans, be accountable to their partners and the players.
“It is very important to us that there is a person [in charge], and this is independent of sovereign wealth funds. I think 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 must own at least 15% of the franchise, and any sovereign wealth fund can only have a passive investment in a team of no more than 5%.
Last month, Qatar’s sovereign wealth fund bought a 5% stake in Monumental Sports & Entertainment, giving it a stake in the NBA’s Washington Wizards, the WNBA’s Washington Mystics and the NHL’s Washington Capitals. And one of the biggest stories in North American sports in the first half of 2023 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 surpassed previous records for franchise valuations in their latest sales, with Marc Lasry’s stake in the Bucks going for $3.5 billion in March and Mat Ishbia buying the Suns from Robert Sarver for $4 billion in February.
Those valuations, which have skyrocketed in recent years, have played a role in the NBA opening up the possibility for private equity firms and sovereign wealth funds to buy stakes in teams. According to Silver, fewer and fewer people are able to write these checks. But he also argued that those valuations are not part of a bubble, saying the sport’s underlying economics and the value of live sports in general validate them.
“I think a bubble would be an indication of some sort of irrational valuations,” Silver said. “I think if you look at the revenue, at least in the case of the NBA, that’s generated by the league, the opportunity for growth, the global market that we’re addressing here, and maybe there are certain unique aspects of the NBA because of how global our league is.
“I don’t think there’s anything irrational at all. Partly the reason 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 don’t want to be the controlling owner of the team.”
Silver added that he believes these entities see the value in buying into the NBA — and buying into the value of live sports — to support his argument.
“Interestingly, these foundations are making financial investments in these teams,” he said. “To me, I think the investment community is just following this trend and saying this is a real growth opportunity.
“So I continue to be, as you would expect, very positive about the opportunity here. But again, I think if you look at the fundamentals of our sport, if you look at the amount of interest from all of these different platforms in carrying live sports programming … I think that’s why we see a very positive outlook and why these values are ultimately representative of the market.”
Silver also hit on some other topics, including:
— Addressing criticism of his decision to suspend Ja Morant for 25 games from National Basketball Players Association executive director Tamika Tremaglio by saying the open-ended nature of the suspension was to come up with a plan that would possible for Morant to get back on the field in the best possible way.
“What I didn’t want was to impose additional check-the-box requirements in terms of coming back,” Silver said. “I wanted to come up with a program that was mutually agreed upon for him to get his life under control before he returns to NBA basketball. And as I understand it, he continues to seek help. And I know that there’s a tremendous amount of pressure that comes with being an NBA player, especially a superstar player, so I’m definitely empathetic to the pressure he’s facing.
“But I also feel, especially around guns and the gun violence that we see among young people in our community, that this is something that we have to take incredibly seriously. This is not an attempt to weigh what the appropriate gun restrictions should be. This is about gun safety. And again, from the time we first met, we seem to agree on how serious a problem this is.”
–Silver reiterated that while expansion is not a certainty, it is at least a strong possibility.
“It’s not a sure thing, but as I’ve said before, I think it’s natural for organizations to grow over time,” Silver said. “We will watch [Las Vegas]. There is no doubt that there is tremendous interest in Seattle. It’s not a secret. There are other markets that have shown interest.
“And just for the people who want to hear or read about this interview, we’re not involved in that process right now. I mean, we’re not meeting right now with any potential groups. What we’re saying to everybody privately is the same . I’m saying publicly that there will be a very open process at the time we’re ready to consider expansion. But it’s not yet — it’s not now.”
–Silver praised the maturity of 2023 No. 1 overall draft pick Victor Wembanyama for how he’s handled everything that’s been thrown at him over the past few weeks, adding that he was glad Wembanyama rebounded from a disappointing first game for the San Antonio Spurs on Friday with a strong showing on Sunday against the Portland Trail Blazers before being shut down by the Spurs for the rest of the 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 game in Paris in January. And my first reaction is that he is an incredible young man. I almost don’t even want to reserve the young man because he seems to be it. an incredible person. [He is] mature beyond his years, worldly, cultured, thoughtful and also has the potential to do great things in this league.”