Dyal’s Atlanta Hawks’ Stake Bolsters NBA Private Equity Boomlet

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The Atlanta Hawks are the latest NBA team to draw up a private equity play from Dyal HomeCourt Partners.

The Hawks confirmed on Tuesday that the club will sell almost 6% of the franchise to Dyal, the private equity fund owned by Blue Owl Capital (NYSE: OWL). Sportico first reported in December that Dyal was buying an undisclosed stake in a deal that valued the Hawks at nearly $2 billion.

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“The partnership between the Atlanta Hawks and Dyal HomeCourt Partners continues to demonstrate the value and growth potential that institutional investors see in NBA franchises,” NBA chief financial officer David Haber said in a statement.

The deal comes as the NBA expands its portfolio of investment partners in the wake of a cash crunch caused by the ongoing pandemic. Arctos Sports Partners more than doubled its stake in the Golden State Warriors recently, and the firm is also invested in the Sacramento Kings. Sixth Street also is invested in the San Antonio Spurs.

The Hawks portion was the third such acquisition for Dyal, which owns parts of the Phoenix Suns and the Kings after being the first investment fund approved by the NBA to purchase stakes in its teams.

Last year, the league passed new rules that allow private equity investors and institutions to buy stakes from current franchise owners. Private equity firms can own up to 30% of a team, with no fund allowed to own more than 20% of one club. While other private equity firms are prohibited from owning equity in more than five franchises, Dyal’s partnership with the league allows it to go beyond that.

Tony Ressler, Hawks owner and co-founder of investment giant Ares Management Co, will maintain his majority stake in the franchise. The sale to Dyal comes collectively from nine existing minority owners, according to the team. The Hawks ownership group includes Grant Hill, Jami Gertz, Jesse Itzler, Sara Blakely, Rick Schnall, Mit Shah and Steven Price.

The Ressler-led group bought the team in 2015 for roughly $850 million, including $120 million in outstanding bonds used to construct State Farm Arena in downtown Atlanta. Moelis & Company assisted the group in closing the deal in 2015 and served as financial advisor on this recent agreement with Dyal.

The Hawks, who are led by All-Star guard Trae Young, made an unexpected run to the Eastern Conference finals last season. The club saw the second-biggest gain (19%) among all teams in Sportico’s most-recent NBA valuations, in part to an increase in season ticket and sponsorship sales. It’s also expected to benefit from Centennial Yards, a $5 billion real estate development near State Farm Arena.