The NBA got the number it was hoping for in the sale of the Boston Celtics—a $6.1 billion valuation for the franchise, an NBA record by more than $2 billion (the Phoenix Suns sold at a valuation of $4 billion when Mat Ishbia purchased the team).
That sale was one of the things the NBA league office was waiting for before turning its attention to expansion. The league wanted a new, higher baseline for franchise values, allowing it to set a higher price for an expansion franchise. The league got the number it wanted.
Now, momentum toward expansion may pick up again.
While there has been plenty of talk about the NBA expanding — by two franchises, one in Seattle and the other very likely in Las Vegas — there has been no meaningful action on that front. In fact, expansion talk around the league has been very quiet. At the All-Star Game in February it was not a topic around the weekend, nor did it come up when NBA Commissioner Adam Silver spoke to the media. The last time Silver said anything publicly about expansion was in November before the NBA’s games in Mexico City.
“There’s no specific date set for expansion…” Silver said at the time. “The process has begun internally at the league office right now. It’s something that we’re continuing to model, to understand the economics of what it would mean to have additional teams.”
Previously, the NBA had been waiting for both a new CBA and the new media deals to be in place before bringing up expansion to the Board of Governors (the body of NBA owners). With those locked in, there were some discussions in broad strokes, but the league wanted to see where the sale price of the Celtics fell.
Now the league might slowly turn its attention back to expansion, but this will not be a fast process. It’s at least three years, and likely a couple more than that, by the time the league approves expansion, gets new owners in place, gets franchises and arenas built, and gets teams playing on the court.
Is the new asking price for an expansion team $6 billion? It’s one thing to pay that figure for one of the largest sports brands in the NBA and the world, the Celtics, it’s quite another to pay that just as an entry fee into the league, before adding in the expenses of building an arena and an organization. The NBA’s ultimate fee for expansion may be lower than $6 billion, but the reality is the NBA will ask for as much money as someone is willing to pay to buy equity in the league (which is essentially what the new owners would be doing). That expansion fee money is split among the existing 30 owners (for example, two teams coming in at $5 billion each would lead to a $333 million payout to each franchise, money that does not get split with the players but goes straight into owners pockets).
That’s a lot of money, which is why momentum toward expansion may pick up again.
