NBA Expansion Hopes Cool Amidst Lucrative New Media Deal

Owners Prioritize Existing Revenue Before Welcoming New Teams

As the NBA’s board of governors convenes, expansion chatter is rife, particularly for cities like Seattle and Las Vegas eager to host new franchises. However, a significant portion of owners appear hesitant to dilute the league’s fresh, multi-billion dollar media rights revenue by adding new members.

Financial Incentives Shift Expansion Focus

The league’s newly inked 11-year, $76 billion media rights agreement with partners like NBC, Peacock, Amazon Prime, ABC, and ESPN has owners contemplating the benefits of absorbing the substantial new income before sharing it. This internal financial strategy is tempering the previously perceived urgency for expansion.

Adam Silver on expansion: “The current sense is we should be exploring… it depends on your perspective of the future of the league.” He also noted expansion is “selling equity in the league.” https://t.co/QjXpC65p9y

— Shams Charania (@ShamsCharania) June 5, 2024

This sentiment is not solely driven by figures like Knicks owner **James Dolan**, who has been identified as a key opponent of rapid expansion. Sources indicate a broader consensus among some owners to let the current 30 teams capitalize on the recent media deal’s financial windfalls.

Economic Realities Dampen Expansion Urgency

The collapse of regional sports networks has created financial strains for many teams, with industry sources suggesting significant revenue losses. The new national media deal offers a vital economic boost, leading some owners to believe it’s prudent to assess its impact before expanding.

“They want to see how the new TV money plays out next year,” a senior executive from another team stated. This cautious approach suggests expansion, while likely, may not occur in the immediate future.

Seattle Remains a Prime Candidate Amidst Slowdown

Despite the current hesitations, Seattle continues to be viewed as a leading contender for a new or relocated franchise. The city has made strides in preparedness, with the Climate Pledge Arena, developed by Oak View Group, specifically designed to meet NBA specifications.

Oak View Group also has plans for a $1 billion arena in Las Vegas, further positioning the city as a strong candidate. The NBA’s last expansion was in 2004 with the Charlotte Bobcats (now Hornets), bringing the league to 30 teams.

NBA Explores Global Growth Alongside Domestic Expansion

Commissioner **Adam Silver** has also highlighted the league’s interest in establishing a European basketball league in partnership with FIBA. He views this international initiative as a form of expansion, potentially offering new avenues for growth and engagement.

“As I’ve said before, expansion in a way is selling equity in the league. If you believe in the league, you don’t necessarily want to add partners. On the other hand, we recognize there are underserved markets in the United States and elsewhere…”

—Adam Silver, NBA Commissioner

The NBA’s expansion fee projections for cities like Las Vegas or Seattle could range from $5 billion to $6 billion per team, though recent valuations of existing franchises, like the Lakers’ $10 billion valuation, might necessitate adjustments to these figures.