Finals-Bound Suns Valued at $1.55 Billion in Private Equity Deal

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Dyal HomeCourt Partners is buying a small stake in the Phoenix Suns in a deal that values the team, which is playing in its first Finals in 28 years, at $1.55 billion, according to people familiar with the terms.

The equity is being acquired entirely from existing Suns limited partners, and not controlling owner Robert Sarver, according to the people, who were granted anonymity because the specifics aren’t public. HomeCourt’s stake will be less than 5%.

The deal was first reported by Bloomberg. Representatives for the Suns, NBA and HomeCourt declined to comment on the financial terms.

This is the first NBA investment for HomeCourt, now a division of Blue Owl Capital, which was the first private equity firm approved by the league to invest in franchises. That right was later expanded to other institutional investors, and the deals have already begun flowing. In April, Arctos Partners bought a small piece of the Golden State Warriors, while Sixth Street invested in the San Antonio Spurs last month.

“The injection of institutional capital into the NBA will be a tremendous benefit to the league and its owners, and the Suns are proud to be Dyal HomeCourt’s first investment,” Sarver said in a statement.

The NBA’s about-face on private equity investors comes amid a few wider trends. First, soaring franchise valuations have limited the pool of people with the money (and interest) to buy up minority LP stakes. Secondly, the COVID-19 pandemic created heightened financial pressure. To offset those shortfalls, controlling owners have added more of their own money and issued capital calls to limited partners. Minority stake sales will likely become more common in the coming months.

The NBA’s rules on private equity investors are as follows: A fund can buy as much as 20% of a franchise, and own equity in up to five teams. (By virtue of its unique relationship with the league, HomeCourt is the only fund authorized to own equity in more than five.) No team can have more than 30% of its equity owned by PE funds.

Sarver purchased the Suns for $401 million in 2004, at the time the highest price ever paid for an NBA team in a transaction. The franchise was valued at $1.64 billion in Sportico’s recent rankings. The team’s LPs include NFL star Larry Fitzgerald, Andy Kohlberg, Sam Garvin and Jahm Najafi.

The Suns face the Milwaukee Bucks in Game 1 of the NBA Finals on Tuesday night.

Blue Owl is the merger of two asset managers, Dyal Capital and Owl Rock Capital, which were combined and brought public earlier this year in a SPAC acquisition. It had about $52.4 billion in assets under management as of June 17.

It is unclear how much HomeCourt itself has already raised, but Dyal has said it plans to have about $2 billion to invest across the league.

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