Las Vegas Expected to Pitch NBA Regarding Expansion Franchise
Posted on: January 5, 2021, 03:53h.
Last updated on: January 5, 2021, 04:29h.
Las Vegas was once shunned by the Big Four professional sports organizations. But in the coming years, three of the leagues could have a home team in the gambling capital.
COVID-19 in 2020 severely damaged NBA revenues. Fans have been absent at arenas, games have been postponed, and television ratings greatly declined. NBA Commissioner Adam Silver conceded last month that at least one expansion franchise might make sense to generate immediate revenue.
Las Vegas, which the NHL Vegas Golden Knights and NFL Raiders call home, is said to be eager to try and win over NBA brass and owners.
Brian Windhorst, a senior NBA writer for ESPN, wrote this week that the league would expect somewhere around $2.5 billion from an expansion team. The funds would be split between the NBA’s current 30 owners. The NBA, Windhorst says, is mulling two expansion franchises.
“Unlike other major revenue streams, such as TV and ticket money, expansion fees are not split with players,” Windhorst explains. “Such a haul could mean about $160 million per team, a windfall that could wipe out the massive debt load that’s piling up, and that alone has perked interest in the expansion path.”
Is $2.5B Realistic?
In early 2020, Forbes said the average value of an NBA franchise was $2.12 billion — a new record. Franchise values are up nearly 600 percent over the past decade.
Billionaire Tilman Fertitta, who owns five Golden Nugget casino resorts in Nevada, New Jersey, Mississippi, and Louisiana, paid a record $2.2 billion for the Houston Rockets in 2017. It was only the second NBA franchise to be sold for more than $2 billion — the first coming in 2014, when Steve Ballmer paid $2 billion for the Los Angeles Clippers.
The coronavirus, however, might result in a retraction in the value of NBA organizations. The Utah Jazz were sold in October for $1.66 billion to Ryan Smith. Meanwhile, Minnesota Timberwolves owner Glen Taylor desperately wants to sell his team, but is struggling to find concrete offers.
A T-wolves sale of $1.5 billion or less, Windhorst says, “would mean a correction in the NBA market after a decade of growth.”
Casino and Sports Town
The Big Four long opposed a franchise from calling Las Vegas home because of the city’s widespread sports betting. That all changed in May of 2018, when the US Supreme Court struck down the federal ban on sports betting that prohibited such gambling everywhere but Nevada.
Former MGM Resorts CEO Jim Murren, who helped bring the town its first pro team with the WNBA Las Vegas Aces in 2018, which are owned by MGM, said that year that Las Vegas is a natural fit for the NBA.
I would think it would be highly plausible that an NBA team would like to relocate to what’s becoming one of the sports capitals of the US,” Murren declared at the time. “I frankly think it will happen. It’s a pretty fun place to watch sports.”
The Aces were an expansion team in the women’s pro basketball league. MGM owns a 50 percent stake in T-Mobile Arena, which would be an ideal venue for an NBA franchise. The facility is home to the Vegas Golden Knights. The Aces play at the Mandalay Bay Events Center.
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