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NBA Launches Private Equity Division to Invest in Startups

kurt badenhausen
·3 min read

The NBA has been acquiring equity stakes in companies for nearly a decade, but investments were rare and never really a focal point. Now, a new arm of the league is looking to change that with a more proactive approach to identifying investments.

“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.”

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In December, the NBA Board of Governors officially approved NBA Equity, which rolls up the league’s existing investments and is poised to accelerate its activity. To head the new venture, the NBA hired David Lee in May. He has spent a decade in the startup world following stints at LG Electronics and consultancy Bain.

Lee says the target is on companies that will “drive innovation in the game and outside the game.” The NBA positions itself as a strategic investor, instead of a purely financial one, so don’t expect an investment in a hot new healthcare startup if it is not core to the NBA business.

“We’re running a basketball league first and foremost,” Haber said. “We think we as the NBA make much more sense identifying opportunities where there’s a strategic bet.”

The primary focus is on companies beyond the seed stage and more geared towards early and growth stage companies instead. But that mandate is flexible—take New Era, for example. The NBA, alongside the NFL and MLB, recently invested in the 102-year-old brand; Haber calls it a “direct strategic fit” in what the NBA is looking to do in the apparel and lifestyle space.

There is not a one-size-fits-all approach to the investments. They can be standalone cash investments, equity obtained as part of a sponsorship or a combination of those. In 2021, the league signed an eight-year partnership with data and analytics firm Sportradar that includes both cash and equity components, and the NBA will receive 3% of the firm over the life of the agreement. Current NBA owners—Mark Cuban, Michael Jordan and Ted Leonsis—all invested in Sportradar in 2015, when it was a private company. The Swiss brand’s current market value is $2.9 billion.

Other NBA Equity investments include smart fabric startup Nextiles, NFT fantasy gaming firm Sorare and event-management business QuintEvents. Sorare started with a soccer focus but was able to move into basketball this year with the NBA partnership.

The total value of the investments is nearing $1 billion, according to people familiar with the matter who were granted anonymity because the details are private.

Lee has a small team at his disposal but can draw on the larger NBA organization and its divisions with expertise in media, technology and merchandise. He has also been able to tap the roster of NBA owners—many of whom are active in this private equity space—when identifying companies or thinking about strategy.

The NFL’s 10-figure investment venture, 32 Equity, has positions in Fanatics, Genius Sports and Skillz. It started a decade ago with each club contributing $1 million and later adding $2 million apiece to the fund. Dhruv Prasad was recently hired to head 32 Equity. Kevin LaForce previously oversaw the investments, as part of his responsibilities before he departed to join RedBird Capital Partners in 2021.

Each NBA team owns 1/30th of NBA Equity, akin to other league assets such as NBA TV and NBA China. The rising value of these assets is a consideration when league executives think about NBA expansion and owners have their stakes diluted for all shared assets and revenue down to 1/32nd.

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