The NBA is looking to become a strategic investor in more likeminded startups. It’s a concept the league has long embraced and will now formalize.
As the NBA continues to gather equity stakes in startups around the globe, the league is formalizing its investment arm. It took a step forward on Friday, launching NBA Equity, a private division to help formalize a more proactive approach in identifying appropriate investments.
In December, the NBA Board of Governors officially approved NBA Equity to bundle the league’s existing investments and enhance its activity in the space. The league hired David Lee, who spent 10-plus years in startups after time at LG Electronics and Bain, to lead the division.
“We were getting more and more outreach from companies that thought it would be incredibly valuable to add the NBA not just as a commercial partner but as an investor,” David Haber, the NBA’s CFO, said in a phone interview. “It really made sense for us to take advantage of the opportunities that are being presented to us in a more structured way.”
Haber explained that the NBA hopes to target specific startups that will “drive innovation” both inside and outside the game. So, in this sense, the NBA will position itself as a strategic investor versus a strictly financial investor. The goal is to get involved with startup companies that can be part of the NBA’s business core.
Identifying said companies goes past the seed stage and more towards the growth stage. Other leagues are doing it, as exemplified by the NFL and MLB joining the NBA in investing in New Era — established in 1920 — which Haber described as a “direct strategic fit,” regarding what the league is doing in the apparel and lifestyle areas.
NBA’s Private Equity Investments
The league signed an eight-year partnership with data and analytics firm Sportradar in 2021, and the NBA will receive 3% of the firm over the duration of the agreement. Mavericks owner Mark Cuban, Hornets owner Michael Jordan, and Wizards owner Ted Leonsis invested $44 million in Sportradar in 2015. Now it’s worth $2.5 billion.
The NBA Equity investments include smart fabric startup Nextiles, which raised $5 million from the league back in June. The vision focused on sensor-laden apparel to help coaches evaluate how players shoot through motion capture data.
The NBA struck a deal with NFT fantasy gaming firm Sorare in Sept. 2022, allowing users to collect NFTs to represent their favorite athletes. The platform was valued at $4.3 billion in 2021, and established similar partnerships with MLS and MLB.
The league made QuintEvents its official experiences provider in July, customizing fan experiences at key events — namely NBA All-Star, the NBA Draft, NBA Summer League and NBA Global Games.
“Tapping into their expertise to form NBA Experiences will allow us to engage with NBA fans in new ways and create lasting memories for years to come,” said Joseph Graziano, the SVP and Head of Global Event Strategy & Development at the NBA, in a release.
The league will have a minority stake in each startup that it takes on over the life of the agreements. Yahoo! Sports reports that the total value of these investments is roughly $1 billion. With its new, concerted approach to investing in startup companies for private equity, expect this figure to increase dramatically. And much like the examples above, the NBA is using these ventures to help build their own brand — on and off the court.
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