In Michael Jordan’s Exit, NBA’s Best Intentions Collide With Free Market
Michael Jordan will have a little more time to work on his short game and steer his NASCAR team to success once the basketball legend finalizes the sale of his majority stake in the Charlotte Hornets.
The announcement of MJ’s departure has been met with cheers from many fans who are itching for a contending franchise and are hopeful the new ownership group led by Gabe Plotkin and Rick Schnall can provide a fresh perspective. But for others, his exit is bittersweet, especially for the NBA, a league that prides itself on diversity and inclusivity.
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The NBA will have zero Black principal owners once the $3 billion sale is approved. It’s a paradox not just because about 70% of the league’s players are Black, but because Black culture has been ingrained in the NBA for decades, from hip hop (J. Cole is included in the incoming Hornets’ ownership group) to streetwear fashion, with its biggest stars transcending the hardwood.
Black Entertainment Television (BET) co-founder Bob Johnson sold the Hornets (formerly known as the Charlotte Bobcats) to Jordan for $275 million in 2010.
In a free-market society, Jordan is entitled to exit at a value that’s fair to him, Johnson said in a phone interview. Johnson sold BET to Viacom for about $3 billion in total consideration in 2000.
While who buys the team isn’t Jordan’s problem, it’s a concern for the league.
When Johnson bought the expansion Bobcats in 2001, he says former NBA commissioner David Stern wanted two things—someone who had the funds to close and a group led by someone who was African American, which worked in Johnson’s favor. The historic transaction made him the first Black principal owner of a U.S. major pro sports team. When he was ready to unload the team nine years later, Johnson tilted toward Jordan, who not only was a friend but had the necessary funds.
“We solved the problem on how Black people get into the league,” Johnson said in a phone interview. “You have to have the money, and it doesn’t hurt to have connections.”
The NBA wants to create maximum value for its 30 controlling owners even as franchise valuations skyrocket to unprecedented levels. And the league office has no obligation to implement special equity rules or affirmative action policies to increase Black participation among the ownership ranks. Neither do Fortune 500 companies.
But many of those entities aren’t as tied to urban markets and aren’t as intrinsically intertwined with the Black community as the NBA. Johnson, who is considered the first Black billionaire in terms of net worth, acknowledges the racial disparity issue among owners but believes he would be hypocritical to criticize the same economic system that helped him generate double-digit returns.
Johnson’s history, however, suggests another potential model for increasing Black ownership. When Johnson launched BET in 1980, Liberty Media chairman John Malone put up $500,000 in equity and debt, funding the property but letting Johnson retain 80% control. Malone, who owns multiple sports properties, received $700 million in Viacom stock in the sale 20 years later. This route could work in sports, but it would have to overcome one big hurdle: Owning a franchise gives an investor a unique kind of influence.
“You would have to change the nature of the beast,” Johnson said. “When an owner walks into an arena, and fans see them, and you’re on a winning streak, it’s one of the greatest thrills you can ever have. It’s an ego thing. … You would have to change that mentality, one that’s like [owning] a corporation.”
The NBA has done well compared to other major leagues when it comes to diversity hiring, receiving a top grade on the racial and gender report card issued by The Institute for Diversity and Ethics in Sport (TIDES) last year. The association, which has some of the most progressive owners in sports, also is the only one of the big four that has two presidents within the league office that are Black (NBA G League’s Shareef Abdur-Rahim and NBA league operations Byron Spruell).
The NBA is far from alone with a lack of diversity at the ownership level. The NFL also doesn’t have a majority Black owner, and neither does the NHL or MLB. Nika White, a principal DEI consultant, thinks pro sports leagues have favored profitability over moral responsibility. White, a business owner, says she isn’t criticizing capitalists but believes owners should be more mindful about creating equitable partnerships within local Black communities.
“It’s a missed opportunity because it’s not allowing the sporting realm to fully reach its potential and to be optimized,” White said in a video interview.
The NBA, which has a robust community initiative program, currently has a couple of minority principal owners in the Brooklyn Nets’ Joe Tsai and the Sacramento Kings’ Vivek Ranadive. Alex Rodriguez, in partnership with Marc Lore, is in the process of taking majority ownership of the Minnesota Timberwolves.
And there has been an increase in Black limited partners, including former NBA stars Grant Hill, Dwyane Wade and David Robinson. LeBron James, who, like Jordan, has become a billionaire, has spoken of his desire to own a team once he retires but the level of investment remains unclear.
Johnson and Jordan solved the conundrum of how to get a majority Black owner in the NBA the old-fashioned way—money and connections. But with the value of teams rising so fast, that sort of transaction may never repeat itself, unless the personal connection also has ungodly sums of money.
The other option, a majority owner ceding control, seems almost as unlikely. After all, owning a team is a good business proposition that also provides the opportunity to rub shoulders with dignitaries and invite friends to the owner’s suite for big games. That’s power, Johnson says. “Who’s going to give that up?”
It’s unclear, but finding someone who’s willing may be the best way forward.
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