Nba: Why Fans Don't Invest

While the NBA generates billions of dollars in revenue and has a massive global fanbase, it is not possible to invest directly in the league by buying shares, as it is not a publicly traded company. The NBA is owned by its 30 member teams, with each team having an equal stake in the business. However, there are alternative ways for fans to indirectly invest in the NBA's success and its individual teams.

The NBA is a private company

The NBA's structure is quite complex, and while it is a privately held company, its Constitution and By-Laws define it as an Association. Decisions are made by the Board of Governors, and the relationship between members is referred to as a contractual one. The NBA falls under New York State jurisdiction.

The NBA is not owned by a single entity or group, and there is no majority owner. Instead, it is a collection of different owners and sports teams. Each team owner holds an equal share and sits on the Board of Governors. They appoint a commissioner to manage the league's affairs.

While the NBA is a private entity, it is not as simple as buying shares to invest. However, there are alternative ways to invest in the NBA's success. For example, you can buy shares in the companies that sponsor the NBA and its teams. These companies benefit from their association with the NBA and its teams, which contributes to their revenue and the value of your portfolio.

Additionally, some NBA teams are publicly traded companies or are owned by publicly traded companies. For example, the New York Knicks and the New York Rangers are owned by Madison Square Garden Sports Corp., a publicly traded company. So, while you cannot invest directly in the NBA, there are still ways to be financially involved.

You can invest in companies with sponsorship deals with the NBA

While you cannot invest directly in the NBA, there are alternative ways to be financially involved. One way to get a piece of the action is to buy shares in the many companies that sponsor the NBA and its teams.

The NBA is a prime hunting ground for sponsorship deals, with multiple layers to the association, including the league, teams, and players. Over $8 billion a year is generated through sponsorship deals, with the brands involved ranging from clothing giants to cell phone networks.

Some of the biggest sponsors of the NBA include Nike, which has been the uniform and apparel maker for the NBA since 2017, featuring on every strip in the league. Nike is also the official sponsor of NBA jerseys, which generates over $140 million in revenue. Another prominent sponsor is State Farm Insurance, a primary sponsor of the NBA and the principal backers of the Rising Stars game.

Other major sponsors include Gatorade, which is the official sports drink of the NBA, and Michelob Ultra, which has had increased visibility since the 2019-2020 season, including through its sponsorship of virtual fan experiences in partnership with Microsoft Teams.

The NBA also has league-wide sponsors that have received visibility during games, including Tissot, the sponsor of every shot clock in the league, which generates approximately $16 million in revenue. Other league sponsors include Anheuser-Busch InBev (Michelob Ultra), Google Pixel, Coinbase, and LegalZoom.

For those looking to invest in the NBA, buying shares in these publicly-traded companies that have sponsorship deals with the association is a way to get financially involved and benefit from the brand exposure and revenue generated through these partnerships.

You can buy shares in a company that owns an NBA team

The National Basketball Association (NBA) is a private company and is not publicly traded on the stock market. Therefore, it is not possible to buy shares in the NBA. However, there are alternative ways to invest in the NBA and its teams.

The NBA is owned by its 30 member teams, so each team has an equal stake in the business. As such, one way to invest in the NBA is to buy shares in a company that owns an NBA team. Here are some examples of companies that own NBA teams:

• Madison Square Garden Sports Corp. owns the New York Knicks and the New York Rangers.
• Maple Leaf Sports & Entertainment, a joint venture between BCE Inc. and Rogers Communications, owns the Toronto Raptors.
• Comcast-Spectacor, a Philadelphia-based sports and entertainment firm, owns the Philadelphia Flyers.
• The Walt Disney Company previously owned stakes in the Anaheim Ducks and the Los Angeles Angels but has since sold them.

While buying shares in these companies will not give you the same benefits as owning a stake in an NBA team directly, it can still provide an opportunity to invest in the success of the league and its teams.

In addition to the companies mentioned above, there are also some exchange-traded funds (ETFs) and mutual funds that invest in companies with sports team exposure. These can be a way to gain indirect exposure to the sports industry, including the NBA.

You can invest in a private equity firm with stakes in an NBA team

While you can't buy shares directly in the NBA, there are still ways to invest in the league indirectly. One way to do this is by investing in a private equity firm that has stakes in an NBA team. This can be an attractive option for investors who want to get involved in the growing sports industry and benefit from the stable returns it offers.

In 2020, the NBA started allowing private equity firms to hold passive ownership stakes. Since then, several private equity firms have established funds to invest in NBA teams, and this trend is expected to continue. It's important to note that these firms can only own minority stakes, usually limited to around 20% or less, and they don't have the same ownership perks as direct investors, such as courtside seats.

Some of the notable private equity firms that have invested in NBA teams include:

• Arctos Sports Partners: They have stakes in the Golden State Warriors (13%) and the Sacramento Kings.
• Dyal Capital Partners (Blue Owl): They have stakes in the Atlanta Hawks 6% and the Sacramento Kings (5-10%).
• RedBird Capital Partners: They made a significant investment in Fenway Sports Group, which has stakes in several sports teams.
• Ares Management: They have invested in Inter Miami CF, a Major League Soccer team.
• Blackstone: While they don't hold direct stakes in teams, they have invested in sports-adjacent businesses and have connections to team owners.

Investing in these private equity firms can provide an opportunity to get exposure to the NBA and the sports industry as a whole. However, it's important to remember that these investments may be limited to accredited or institutional investors, and there may be high minimum investment requirements.

Additionally, it's worth noting that the NBA is not the only league attracting private equity investment. Since 2019, when the MLB opened its doors to institutional investment, private equity firms have invested billions of dollars across major sports leagues, with the exception of the NFL, which is still considering its options.

You can buy shares in a publicly-traded sports team

While you can't buy shares directly in the NBA, there are still ways to be financially involved with the league and its teams. The NBA is not a publicly traded company, but some of its teams are publicly traded, or owned by companies that are publicly traded.

The New York Knicks and the New York Rangers are owned by Madison Square Garden Sports Corp, a publicly-traded company. The Toronto Raptors are partially owned by Maple Leaf Sports & Entertainment, which is partially owned by the publicly-traded company BCE Inc.

If you're interested in investing in a sports team, you can also buy shares in the corporate parent of a particular team, or in a company affiliated with the ownership of the team. For example, video game producer Nintendo owns the Seattle Mariners.

You can also buy exchange-traded funds (ETFs) or mutual funds that invest in the parent companies of select sports teams.

Frequently asked questions