The looming bidding war for an NBA expansion team is expected to be awarded to Las Vegas in what would become the most competitive and expensive sports deal in U.S. history.
The list of potential suitors ranges from LeBron James and his supporters to companies that own the Red Bull brand, people familiar with the matter said. According to two sports consultants who have previously sold NBA teams, the total price, including building a new stadium, could reach $7 billion.
Expansion by America’s largest sports league is rare. The last time the NBA added a team was in 2004, when it awarded Charlotte a team. The NFL hasn’t grown since 2002, and Major League Baseball’s most recent additions were in the late 1990s. Team valuations also rose. Las Vegas has become a sports destination – hosting the recent Super Bowl and adding an MLB team to its NFL, NHL and WNBA franchises.
“Vegas is a unicorn,” said Michael Leeds, a sports economist and professor at Temple University. The city’s combination as a major tourist destination and thriving sports town will make it “hugely attractive” for NBA teams.
Speculation is growing that the NBA will add two teams, with Seattle and Las Vegas the most likely candidates. The league has been waiting for media deals to be finalized, which should be done soon. The agreements, expected to be worth about $75 billion, will then be used to price new franchises. NBA Commissioner Adam Silver said this week that the league will pivot to expansion in the fall.
Even more interesting is that Vegas seems very much up for grabs. It would be a different story if the league settled in Seattle, where the NBA team moved in 2008. The ownership group of the Seattle NHL team is considered a favorite to acquire an NBA franchise.
The $7 billion price tag would exceed the current high of $6.05 billion paid last year for the NFL’s Washington Commanders and their stadium by a group led by Josh Harris.
A big variable in cost will be where the NBA team plays in Las Vegas. 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, too, would like the opportunity to host an NBA team.
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However, sports franchises are increasingly pushing to own stadiums and then develop the surrounding real estate as a way to add another lucrative revenue stream. An investor group taking this route would likely need to add billions to the price tag. The proposed stadium to move MLB Athletics to Las Vegas is estimated to cost $1.5 billion and would open in 2028.
The cost of building a new arena does not include the cost of purchasing a team from the NBA. Various media reports put the cost at about $4 billion. Some advisers expect the amount to be closer to $5 billion due to fierce competition and rising media rights revenue, people familiar with the matter said.
The outcome of the sale of the NBA champion Boston Celtics could also affect the pricing of expansion teams. Sportico values the Celtics at $5.1 billion, ranking fourth in the league.
In Las Vegas, various groups are vying for real estate. Developer Tim Leiweke of Oak View Group has proposed a $10 billion project surrounding an NBA arena. Meanwhile, LVXP has come up with its own plan to build a complex around the sports complex on the Las Vegas Strip.
James, a billionaire in his own right, has said he would like to own a team, pointing to Las Vegas. The Los Angeles Lakers star is backed by RedBird Capital Partners and Fenway Sports Group, which invested in James’ SpringHill Company in 2021.
“They have it all here,” James said after the league’s first in-season tournament in Las Vegas last December.
But James isn’t the only one like this. NBA Hall of Famer and media personality Shaquille O’Neal has said he wants to join any available team. O’Neal was forced to sell his minority stake in the NBA’s Sacramento Kings due to a gambling partnership.
Even multinational consumer goods companies want a piece of the action. Energy drink maker Red Bull Ltd. is in early discussions about a bid to win the Las Vegas franchise, according to a previous report by Bloomberg.
And this is just the beginning. Once the NBA officially announces its expansion process, more investor groups are expected to join the fray.
