While the price of NBA franchises continues to swell, the league is opening up to new forms of investment capable of keeping up with this inflation. In 2020, the NBA was the first professional league in US sports to authorize investment capital for its franchises.
According to SporticoAdam Silver’s league will go even further as it will soon allow pension funds, sovereign wealth funds and endowment funds to invest in its clubs.
These giant investment structures brew billions of dollars but the NBA imposes limits. Thus, a franchise cannot sell more than 30% of its capital to these various funds, and a fund cannot own more than 20% of a team. A fund may also not invest in more than five different clubs.
Why these precautions? First, because these funds (pension, sovereign or endowment) are asset managers, who invest “in a logic of guaranteeing future income” and that if a fund took executive control of a club, its management logic would be above all economic, in order to guarantee growth in the value of the club and thus preserve a return on investment, and not sporting.
Then because sovereign wealth funds are often managed by states (Norway, China, United Arab Emirates, Kuwait, Qatar, etc.) and the NBA has an interest in protecting itself from “political” investments.
Sportico recalls all the same that MLSE, the company which notably manages the Raptors, has long had in its capital the pension fund which managed the retirement of teachers in Ontario.
