The looming bidding war for the NBA expansion team expected to be awarded to Las Vegas is shaping up to be the most competitive and priciest sports deal in U.S. history.
The list of potential buyers includes everyone from LeBron James and his backers to the company that owns the Red Bull brand, according to people familiar with the matter. The total cost, including building a new arena, could reach $7 billion, according to two sports advisers with experience selling NBA teams.
Expansion is rare for America’s biggest sports leagues. The NBA last added a team in 2004, when it gave Charlotte a franchise. The NFL hasn’t grown since 2002, and Major League Baseball’s most recent additions were in the late 1990s. Team valuations have also soared. And Las Vegas has become a sports destination, hosting a recent Super Bowl and adding an MLB team to its NFL, NHL and WNBA franchises.
“Las Vegas is a unicorn,” said Michael Reese, a sports economist and professor at Temple University. As a major tourist destination and a thriving sports city, an NBA franchise would be a “huge draw.”
Speculation is growing that the NBA could add two teams, with Seattle and Las Vegas being the leading candidates. The league has been waiting to start the process until media deals are finalized, which should happen soon. Those deals, expected to bring in about $75 billion in revenue, will then be used to set the price for the new franchises. NBA Commissioner Adam Silver said this week that the league would begin work on the expansion in the fall.
The potential acquisition of a Las Vegas team also adds to the intrigue — unless the league comes to Seattle, where the NBA team moved in 2008. The Seattle NHL team’s ownership group, led by David Bonderman and his daughter Samantha Holloway, are seen as the front-runners to acquire an NBA franchise.
The $7 billion price tag would surpass the current record of $6.05 billion paid by a group led by Josh Harris to buy the NFL’s Washington Commanders and the team’s stadium last year.
One big factor in determining the cost will be where Las Vegas’ NBA franchise plays its games. The NHL’s Golden Knights play at T-Mobile Arena, which is co-owned by MGM Resorts International. MGM CEO Bill Hornbuckle said earlier this year that he also wants to attract an NBA team.
Arena Fee
But sports franchises are increasingly looking to own stadiums and develop the property around them to add another revenue stream. An investor group that takes this route could have to add billions of dollars to the price tag. The proposed stadium for MLB’s Athletics’ relocation to Las Vegas is estimated to cost $1.5 billion and open in 2028.
The cost of building a new arena would be on top of the cost of buying the franchise from the NBA, which various media reports have put at about $4 billion. Some advisers expect the cost to be closer to $5 billion because of stiff competition and rising media-rights revenues, according to people familiar with the matter who asked not to be identified because the discussions are private.
The outcome of the sale of the NBA champion Boston Celtics could also influence the price of the new team. Sportico values the Celtics at $5.1 billion, the fourth-highest value in the league.
On the ground in Las Vegas, various groups are vying for real estate: Developer Tim Leiweke of Oak View Group has proposed a $10 billion project centered around an NBA arena, while LVXP has unveiled its own plans for a mixed-use complex surrounding a sports venue on the Las Vegas Strip.
James, a billionaire himself, has said he wants to own a team, with Las Vegas in the running. The Los Angeles Lakers star is backed by RedBird Capital Partners and Fenway Sports Group, which are set to invest in James’ SpringHill Companies in 2021.
“We’ve got it all here,” James said in December after the league’s first-ever in-season tournament was held in Las Vegas.
But James isn’t alone. NBA Hall of Famer and media personality Shaquille O’Neal has said he’d be interested in joining any team. O’Neal was forced to sell his minority stake in the NBA’s Sacramento Kings because of a gambling partnership.
Even multinational consumer goods companies are looking to get in on the action: Energy drink maker Red Bull is in the early stages of a bid to acquire a Las Vegas team, Bloomberg previously reported.
And this is just the beginning: many more investor groups are expected to come on board once the NBA officially announces its expansion process.
