💳 What to Make of these NBA Ownership Sales

Something’s going on in these NBA waters, and it starts at the top.

It was unprecedented when it was announced in January that Mark Cuban finalized a deal to sell the majority of his Dallas Mavericks to the owners of the Las Vegas Sands casino empire (headed by billionaire, Miriam Adelson). A few months later, word got around that the Minnesota Timberwolves were experiencing a changing of the guard from Glen Taylor to minority owners, Alex Rodriguez and Marc Lore (even though this story is a little odd and Taylor has ultimately decided not to sell 😬). And literally 2 weeks after the Boston Celtics won their league leading 18th championship, majority owner Wyc Grousbeck announced his family would be selling all of their shares of the team — and by the time 2028 rolls around, he would officially have no more control of Lucky the Leprechaun.

Which brings us to an interesting topic of discussion: why have 3 different owners in a 7-month span engaged in conversations to sell their teams? Is there a trend we’re not noticing within NBA circles? What could ownership look like in the future with these NBA teams?

Let’s get after it…

We’ve gone over the Cuban and Taylor sales, but what is Grousbeck doing?

• We’re not going to beat around the bush, but the Celtics are one of the highest valued teams in the NBA (in 2023 they were ranked #4 according to Forbes at ~$5B — yes, that was calculated before winning the 2023-24 NBA Finals). Not to mention, they’re one of the most recognizable brands in all of sports.

• But what’s unique about this sale is the ultimate transparency behind wanting “cash out” for his family.

  • In a statement issued a couple weeks ago, the team cited “estate and family planning considerations” as the reason behind the sale.

  • But what none of us really notice is that there’s a constant stream of smaller undisclosed shifts in equity, trusts, and ownership structure aimed at making sure there are little to no complications when it comes to estate planning.

• As franchises skyrocket in value (see Table 1), the price of handing that asset down to family members grows dramatically due to taxes.

• Selling also grows for family members who aren’t directly involved in the team.

  • And it’s even more apparent for owners who paid relatively little for their franchise.

  • The Celtics group, led by Irving Grousbeck and his son Wyc, bought the team in 2002 for $360M — which was the highest price paid for an NBA team at the time (think about that compared to its current valuation 😳).

• Ultimately, Grousbeck would like to sell the Celtics in two phases — 51% now, and the rest in 2028…except he wants to stay in control until the 2nd transaction closes (you got it, he wants to eat his cake and have it too!). Though it might be tough to convince someone to pay over $5B for a team and not gain immediate control.

  • Not to mention, the whole “phases” implementation hasn’t necessarily been a beacon of hope.

    • We’re looking at you T-Wolves — who are currently in a legal battle over the contract.

Why has this become a trend in the NBA?

• You already know where we’re going with this: the NBA is reportedly finalizing its next set of media rights deals, which is going to be worth ~$76B .

  • This means team owners stand to potentially gain from even more revenue. (You know what all those Wall Street analysts say…buy low, sell high!)

• And it makes sense, as current owners might believe this is the best time to sell their teams as the promise of further revenue growth attracts interest from potential suitors.

• When it comes to the Celtics, cashing out now will no doubt generate a huge profit given the team is now worth more than 10x from their purchase in 2002.

• We can also sprinkle on some blame when it comes to the new CBA.

  • If you’d like to learn more, we highly recommend reviewing all 676 pages.

  • All you need to know in this case, is the fact that owners will now be punished (through luxury tax payments and draft picks) if they go over a certain spending limit (i.e. if they spend an exorbitant amount of money).

    • It just so happens the Celtics have the 3rd most expensive roster going into next year — all because they wanted to retain their championship lineup (and who could blame them?).

      • Grousbeck might be planning his exit strategy because he knows he’ll be paying some pricey luxury tax bills.

• Let’s also not underscore the fact that the landscape of NBA ownership is also shifting. As valuations continue to increase, only the wealthiest of the wealthy owners will be able to afford these shiny toys.

  • It’s why Cuban sold to the Adelson family, who’s a casino-titan in Vegas.

  • It’s why Matt Ishbia, founder of United Wholesale Mortgage (net worth ~$12B), priced out the rest of competition and bought the Phoenix Suns.

  • And now we’ll get to see who will purchase one of the most storied franchises in sports, who will most definitely break the record for highest sold NBA team.

Overall, it’ll be interesting to see if other teams majority owners decide to follow suit. Because these owners could no doubt turn a profit. The only problem might be…how many people can afford these insane price tags + would want to buy an NBA team?

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Quick Hitters

• ⚽️ We won’t harp on the issues surrounding the Copa América final. We like to keep it civil…sometimes. Fox Sports closed out its soccer-filled summer on Sunday, as the Euro and Copa América finals doubleheader notched record high TV ratings in the U.S. According to Nielsen live-plus-same-day data, Spain’s 2-1 victory over England averaged ~6.4M viewers in Fox’s afternoon window, which marked a 7% increase over the linear-TV deliveries for the 2021 Italy-England Final on ESPN and ESPN2 (~6.0M). As for the primetime slot, the Copa América final between Argentina and Colombia averaged another ~6.1M viewers on Fox, making it the tourney’s most-watched title on an English-language network.

  • All in all, Fox Sports’ coverage of the Euros averaged a record ~1.7M viewers per match, (+34% vs. 2021), while the Copa came in at ~1.5M viewers across the Fox lineup, which included FS1 and FS2.

• 👟 Is Adidas officially back?? They announced results for Q2 on Tuesday that reflect the turnaround. Revenue rose 9% to ~$6.4B (+16% from Q2 2023 — if we’re excluding Yeezy sales 😉). Operating profit nearly doubled to $377M. The reason? The German company cited better “sell-throughs, reduced discounting, lower sourcing costs and a more favorable category mix” for the profit surge.

  • Adidas also ended up raising its yearly forecast after the better-than-expected performance. Adidas now expects revenue to increase at a “high-single-digit” rate and operating profit is projected at ~$1.1B, (+40% than the previous forecast).