Gerry Cardinale, the founder of RedBird Capital, has stated that an NBA expansion team will be coming to Las Vegas.
Having been rumoured to be in the works for the past 18 months, plans for Fenway Sports Group and its partners to move to acquire an NBA team in Las Vegas were confirmed on Wednesday.
Sources had told the ECHO as far back as 2021 that an NBA franchise was on the agenda for the Liverpool owners, with Reds chairman Tom Werner and FSG partner and Boston Red Sox president Sam Kennedy both going on record to signpost such a move.
Another to have hinted at franchise acquisition in the world’s biggest basketball league was Gerry Cardinale, the founder and managing partner of RedBird Capital Partners, the US firm that acquired an 11% stake in FSG back in March 2021 through what was a $750m investment play.
Cardinale and RedBird, who purchased Italian giants AC Milan in September of 2022, were joined in that deal by basketball icon LeBron James and his business partner Maverick Carter, with the RedBird/FSG deal seeing James accrete the stake he previously held in Liverpool into one per cent of the $10bn-valued FSG portfolio.
James’ partnership with FSG and RedBird has since grown. In March of this year the 38-year-old Los Angeles Lakers star secured additional equity in FSG as part of a lifetime deal he struck with the company, one where Fenway Sports Management would be able to pursue global marketing and sponsorship opportunities for the basketball great.
In the months that followed the RedBird/FSG deal, both firms made an investment in James and Carter’s SpringHill Entertainment content and culture company. Nike and the makers of the Fortnite video games, Epic, were also involved.
But a big part of the plan has been for James to own and run a basketball franchise in the future, with the star himself stating to ESPN this week that a Vegas franchise was his “ultimate goal.”
It is also the goal of FSG. Having looked at the Minnesota Timberwolves as an opportunity between 2020 and 2021, the Reds owners switched their focus on the likely expansion of the league to 32 teams from 30, with franchises in Seattle and Las Vegas set to come online.
Speaking at the Sports Business Journal Intercollegiate Athletics Forum in Las Vegas, Cardinale confirmed the long term plan.
“We’re looking at bringing an NBA expansion team here in partnership with LeBron and Fenway Sports Group,” said Cardinale, who also shared his thoughts on team valuations and where the direction of travel may be heading in North American sports in particular.
“We started this project three years ago. The price talk on an NBA team three years ago was $3bn. The price talk today on an NBA expansion team is $5.5bn to $6bn. I’m not sure I can make that work.
“Maybe we’re hitting that inflection point, and it may mean that, if we want to see a continued linear progression in these valuations, maybe it’s a different type of capital [that needs to come in]. Maybe I’m evolved out of existence, and maybe now I’m handing the baton over to a sovereign [wealth fund] or to a lower cost-of-capital provider. It could be that we’ve reached that point.”
The Nevada desert is a near certainty to have an NBA team when expansion does arrive, with Las Vegas now turning into a sporting mecca through teams such as the Las Vegas Raiders (NHL) and Las Vegas Golden Knights (NHL) arriving in recent years. The Oakland Athletics baseball team is also set to move to the city after $1.5bn was spent to acquire land for a new stadium. Formula One recently brought the grand prix to Sin City for the first time, with the city now a booming market for sport.
There had been a couple of issues that needed to be resolved before any conversations around new franchises could be had, with the NBA players’ union and the League itself having to reach an agreement over a new collective bargaining agreement (CBA) to run to 2029. That was finally rubber stamped during the summer.
Next on the agenda is a new cycle of media rights to be negotiated, something that is expected to happen next spring. Once that has been completed, NBA commissioner Adam Silver gave his clearest indication yet when he said the league would “turn to expansion.” Silver added that the NBA “doesn’t have anything specific in mind right now,” but that it “makes sense over time.”
Given the amount of work that would have to go into getting new franchises up and running, not to mention the fact that it would have to be voted through by current member teams, all of who will want to be handsomely compensated due to them having to share the media rights pot with ever more teams, won’t be swift, with some suggestions from industry insiders that the ECHO has spoken to that it could take as long as five years.
But while take off for a Vegas NBA team may be a little while off, those interested in being at the helm are already mobilising to determine how they will go about funding their involvement and pooling capital to complete on a deal. FSG, however, are understood to be frontrunners and preferred bidders in the eyes of some NBA insiders.
During the summer, Seattle Mayor Bruce Harrell said that he expected a new expansion team to arrive in a much shorter time frame than five years.
Once TV media negotiations are completed and attention turns to expansion the process will begin in earnest to find new markets for teams and then new owners, with the entry price likely to be $2.5bn-plus, with that sum being distributed through the existing member clubs, who would have to vote through any proposals for an expanded league.
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