Considering that the average NBA team is worth over one billion dollars, owning an NBA franchise is not a bad investment to have. Yet, many people are unaware of the requirements that exists to become an NBA owner. Some people may assume that you have to be a wealthy individual or that you need to have an excellent credit rating and great connections. Well, the answer is yes to all of the above; for instance, the application form that is required to start a new NBA team has to be accommodated by a $1 million application fee.
Before an application for a new NBA team can be approved, it must first clear the commissioner’s office. If the application is approved by the commissioner, then the proposal is escalated and must be approved by a majority three-fourths vote by the NBA’s Board of Governors. If the application is approved by the board, then the $1 million fee is kept by the NBA and the fees are applied to the new owner’s membership dues. If the application does not make it past the commissioner’s office nor the NBA’s Board of Governors, then a portion of the $1 million application fee is returned to the applicant.
It is actually easier to buy/transfer an existing NBA team than it is start a new one; however, there is still an intense approval process that must be successful in order for the transfer of a team to be complete. The first thing that needs to be done is the current owner must receive a transfer approval from the commissioner’s office after a prospective buyer has made a guaranteed commitment to purchase a team. After the commissioner has accepted an owner’s request to transfer a team, then the NBA’s Board of Governors has to review the sale/transfer proposal and they must approve the transfer with a majority vote of three-fourths.
Once an applicant has successfully obtained ownership of an NBA team, they have essentially hit the jackpot. This is because the NBA is a very lucrative and luxurious business to be a part of. In the NBA, owners are considered rock stars in a suit, for they are lauded for their wealth, they are usually adored by NBA fans and the global business community, and owning an NBA team typically yields high annual profits and long-term equity in a team that can be worth 100s of millions of dollars.
For example, Bruce Levenson who is the former owner of the Atlanta Hawks purchased the team in 2004 in a package deal that cost him $240 million. The package deal included operating rights to the Philips Arena, and ownership of Atlanta’s hockey team, the Atlanta Thrashers. In 2011, Levenson sold the Thrashers for $170 million, and in 2015 he sold the Atlanta Hawks and operating rights to the Philips Arena for $750 million. The sale is impressive when you consider that during his tenure as an owner he made hundreds of millions of dollars in merchandise sales, ticket sales, TV package deals and more.
The fortune that Levenson has made from the Atlanta Hawks according to brucelevenson.com does not include the hundreds of millions of dollars that he has accumulated as a successful technology entrepreneur and co-founder of United Communications Group, which is a business information firm that publishes data for various industries. UCG also owns GasBuddy, which is a mobile app that locates affordable gas prices, nationwide.1 Comment on The Rewards of NBA Ownership and How Bruce Levenson made a Fortune from His Investments