CVC in talks to buy 15% stake in NBA’s San Antonio Spurs

Private equity firm CVC Capital Partners is reportedly in talks to acquire a minority stake in the San Antonio Spurs in a deal that would value the National Basketball Association (NBA) franchise at around US$1.3 billion.

According to a report by the Financial Times, the Luxembourg-based company is seeking to buy a stake of around 15 per cent from the Holt family, which founded industrial vehicles firm Caterpillar and currently controls the team’s parent company, Spurs Sports & Entertainment.

The report says negotiations between the five-time NBA champions and CVC, which has invested heavily in sports such as rugby union, soccer, motorsport and, most recently, volleyball, began ‘about a year ago’.

News of the talks come with the NBA currently in the process of reworking its ownership rules to allow private equity investors to own minority stakes in multiple franchises. 

A recent report by Sportico said the league’s board of governors has agreed a framework whereby private equity funds and other institutional investors may own up to 20 per cent in a single franchise, and that those entities can own shares in up to five teams. 

Last year the NBA permitted Dyal Capital Partners to take passive stakes across multiple teams, with reports suggesting the firm is in the process of raising as much as US$2 billion to spend on NBA franchises.

Earlier this week, the New York Post reported that a five per cent stake in the Golden State Warriors had been put up for sale by minority investors who are looking to free up capital amid the coronavirus pandemic, which has hit revenues across the league.

Neither the NBA nor CVC have commented on the FT report, which said the deal could see the firm take a seat on the Spurs board and have a say in commercial matters, but added that there are no guarantees it will proceed.

The NBA has moved to relax its ownership rules because minority partners who own passive shares in teams are concerned that sky-high franchise valuations are pricing out all but the wealthiest investors, with the average team now estimated to be worth nearly US$2.4 billion.

By widening the pool of potential buyers, the league is hoping to offer limited partners a way of cashing in on their investments, as well as generating greater competition and, in turn, fuelling further rises in team valuations.

Source: Sports Pro Media