The path to the Larry O'Brien trophy might become more difficult when another two teams enter the fold.
The path to the Larry O'Brien trophy might become more difficult when another two teams enter the fold.Nate Billings/Associated Press
NBA owners reportledy voted to explore adding franchises in Las Vegas and Seattle.
This would mark the league’s first expansion in more than two decades and set up a battle to acquire pro teams at a time of surging valuations. The timing and probability of adding teams is not yet known.
The NBA didn’t immediately respond to a request for comment.
Bloomberg reported last week that the league had begun talks with several investment banks to represent it in the expansion talks. The NBA started studying adding teams last summer and enlisted PJT Partners as an adviser.
The NBA last expanded in 2004 after Robert L. Johnson paid $300 million for a franchise based in Charlotte that’s now called the Hornets. The league’s revenue has grown significantly since then thanks to a boom in the value of sports media rights that’s boosted team valuations above $10 billion.
In considering adding two franchises, the owners of the NBA’s 30 teams are balancing diluting their share of league revenue with getting an equal cut of the expansion fee. It’s unclear what the league will charge, but industry executives and insiders are anticipating talks to start at $6 billion with the potential to rise well beyond that.
Expansion fees were expected to be as much as $5 billion, but last year the Boston Celtics sold for $6.1 billion and then Mark Walter acquired control of the Los Angeles Lakers at a $10 billion valuation. The league has also seen minority stakes sell at a premium. The Golden State Warriors’ holding company is selling a 5% slice of the team at an $11 billion valuation.
Las Vegas and Seattle have long been considered the favorites for NBA expansion. Seattle used to have the Supersonics, which moved to Oklahoma City in 2008. Las Vegas, which added NFL and NHL teams over the past decade, has hosted the NBA’s summer league and the final of the NBA Cup, an in-season tournament.