Sovereign Wealth Funds Can Now Invest in NBA Teams
Posted on 12/01/2022
Global asset owners are becoming large players in the world of sports. Presently, Saudi Arabia’s Public Investment Fund formed the LIV golf tournament which competes within the PGA Tour. The Board of Governors of the National Basketball Association (NBA) will allow sovereign wealth funds, pensions, and endowments to acquire passive stakes within their teams. In recent years, the NBA allowed private equity firms the ability to maintain ownership stakes in sports teams. In 2020, Blue Owl Capital Inc.’s Dyal HomeCourt Fund had the ability to partake in minority equity stakes with NBA teams. The fund has stakes in the Atlanta Hawks, Phoenix Suns, and Sacramento Kings. The change enables the valuation of sports teams to increase as more buyers are able to access these teams. However, the basketball association maintains the capacity to deny any interested investor. Furthermore, they hold the ability to scrutinize each and every fund investor, thus allowing them the final say in if the investor can buy into the NBA or not. Sovereign wealth funds hold over US$ 10 trillion in assets under management, according to recent data from the Sovereign Wealth Fund Institute (SWFI).
Sovereign wealth funds have actively been investing in leagues, sports infrastructure, and soccer teams. Presently, public pensions and sovereign wealth funds have indirectly accessed sports teams through various private equity funds:
The Ontario Teachers’ Pension Plan was once an investor in Maple Leaf Sports & Entertainment Partnership (MLSE), the parent company of the Toronto Raptors. In August 2012, Ontario Teachers’ Pension Plan completed the sale of its ownership stake in Maple Leaf Sports and Entertainment to Bell and Rogers Communications Inc. Ontario Teachers’ Pension Plan had received the $1.32-billion purchase price for its 79.53% ownership share of MLSE. Ontario Teachers’ Pension Plan first invested in the company in 1994 through its private equity investment division, Teachers’ Private Capital (TPC). In 1994, Teachers’ participated with Steve Stavro to purchase the 60% block of shares of Maple Leaf Gardens Limited held by the estate of Harold Ballard, the 20% block owned by Molson and the 20% of the Company held by the public. Teachers’ Private Capital acquired 49% of the equity for $44 million, with MLG Holdings owning the other 51% (MLG Holdings is controlled by Mr. Stavro (80%) and TD Bank (20%)). In 1998, MLSE formed following Maple Leaf Gardens Limited acquisition of 100% of the Toronto Raptors basketball team and the Air Canada Centre.
Business of Sports
During 2021, private equity firm Arctos Sports Partners took a 13% stake in the Golden State Warriors NBA team. In 2021, Arctos Sports Partners purchased a 15% stake in the Portland Thorns and Timbers professional soccer teams.
Keywords: Ontario Teachers Pension Plan.
