Private Equity – Dyal Capital Partners Targets Stakes in NBA Teams

May 21, 2020 | News, Private Equity
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Barron’s is reporting that Dyal Capital Partners, a unit of Neuberger Berman, wants to raise $2 billion to buy minority interests of National Basketball Association teams. The NBA selected Dyal in April to form a fund to buy up minority stakes. Dyal Capital Partners has approval so far by the NBA ownership. All 30 team owners had to vote on that plan.

Dyal Capital Partners Looks for Limited Ownership Stakes

It has been increasingly difficult for minority investors to sell their interest in a team. Today the average valuation of an NBA team sits at $2.12 billion. The top valuation is $4.6 billion for the New York Knicks. A limited number of billionaires have an interest in owning a sports franchise. Finding a buyer can be challenging and time-consuming. The number of potential buyers with the liquidity to structure a deal that would pass the leagues review is even smaller

Partners at Dyal Capital Partners think there may be more interested sellers due to the COVID-19 pandemic. There have been discussions about when and how to reopen. Still, a sport that requires close proximity and physical contact for the entire game-opening back up to play before there is a virus is an enormous, if not impossible, challenge.

While private equity funds are not allowed by the NBA, there are a lot of private equity managers who have used their wealth to invest in the sport.

Finally, Barron’s pointed out that Tom Gores, founder of Platinum Equity owns the Detroit Pistons; Josh Harris, the co-founder of Apollo Global Management, owns the Philadelphia 76ers; Marc Lasry, teamed up with Wes Edens, founder of Fortress Investment Group to buy the Milwaukee Bucks.

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