The sale of the Phoenix Suns NBA team could have an impact on the plans of Liverpool owners Fenway Sports Group.
The Suns and the WNBA team, the Phoenix Mercury, are to be sold to billionaire Matt Ishbia in a deal reported to be worth $4bn (£3.3bn); a figure far in excess of some valuations earlier this year that had pegged the franchise at around the $2.5bn mark.
A deal is yet to be formally completed but it is expected to be so in the coming days, with current Suns owner Robert Sarver having put the teams up for sale back in September after being fined $10m and suspended following an NBA investigation revealed racist and sexist behaviour in the workplace. It was a punishment that the likes of basketball icon and FSG partner LeBron James had felt insufficient.
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FSG have been interested in acquiring an NBA franchise for some time. They have cast a glance at the Minnesota Timberwolves in the last 18 months while financial sources in the US told the ECHO they had taken an 'opportunistic' look at the Suns operation, although they were never serious contenders; not with their sights set on an expansion team in Las Vegas.
It is a little over five weeks since it was first revealed that FSG would be willing to listen to offers from any would-be bidders wanting to take over their full shareholding of Liverpool FC. Well-placed sources in the US have since told the ECHO that while a deal could be made for the right price - $4bn and above to even start a conversation - the preference of principal owner John W. Henry is to keep the club, as it is for a number of his key partners. Some shareholders are understood to be willing to assess their options of cashing out at a high valuation, and part of the willingness of FSG to explore their market value is linked to that, with a "strategic partner" the preferred option.
The $4bn that the Suns are to be sold for and the rough $4bn valuation of Liverpool has made for an easy link. That is because FSG are the frontrunners for the team in Vegas; a plan that will see James likely helm the project as team owner when the 37-year-old calls time on his glittering career on the hardwood. But it isn't imminent, and the NBA haven't even given concrete decisions on where the expansion franchises will land, with Seattle and Mexico City also having eyes on a slot. The league currently sits at 30 teams and is expected to rise to 32, although it will be down to the votes of other team owners on whether that passes or not.
NBA commissioner Adam Silver said recently there were two factors that would need to be determined before any plans for an expansion of the world's foremost basketball league could be explored. A new Collective Bargaining Agreement (CBA) would need to be achieved with the National Basketball Players' Union (NBPA), firstly. The current CBA, which covers the rules relating to player contracts, trades, revenue distribution, the NBA Draft and the league's salary cap, ends in June 2023 and an amicable solution to it is key to moving forward with any other plans.
There is also the next media deal that needs to be sealed. Another two teams being added to the NBA would mean there would have to be a generous rise in revenues to appease the current owners of the 30 teams who would have to share the pot even more.
It is expected that solutions will be found for both of the above and that an expansion of the NBA will happen, although that could well take two years or more.
Las Vegas has turned into something of a mecca for US sports in recent times, with the NFL and NHL both landing there via the Las Vegas Raiders and the Vegas Golden Knights, while Formula One will add a Vegas race to its schedule from next year. It wants, and will likely get, an NBA team, and a $3bn entertainment complex is already in the works, one that will include a 20,000-seater NBA-ready arena for whoever gets the keys to the franchise. FSG are widely regarded as being at the very front of that particular queue.
There had been a rough valuation of around $2.5bn placed upon the new expansion franchises when they become available to be bid on. But with sports valuations operating with a large element of LIFO (last in first out), where the last deal tends to set the tone for the next and so on, the sale of the Suns for $4bn is likely to see the cost of getting involved in an expansion team in Vegas be considerably more than had first been suggested.
That has led to the assumption that in order for FSG to acquire one of the new NBA franchises, they would need to sell another of their assets. And, given any offers of $4bn and above for Liverpool would be listened to, that makes an easy case for the English football giants to be seen as something of a key component in FSG getting what they want in Vegas and acquiring a team in a major North American league, in a big market, and having the cost certainties and reduced risk that comes with a closed league system and a salary cap; the latter being something that doesn't exist in either European football or Major League Baseball, where FSG have ownership of the Boston Red Sox.
But it isn't a case of having to sell one to fund the other. FSG, in their own words, are in "growth mode", and that means adding to their $10bn empire. There will need to be a capital raise to pursue the acquisition of a team in Vegas, but that could come from selling off further parts of the main business, as they did to RedBird Capital in March 2021 when they took 11 per cent for a $750m fee; or selling a stake in the Reds themselves, but retaining ownership and the benefits that come with that at a time when football team valuations continue to rise, freeing up capital for them to use in other areas, and welcoming a partner on board that could bring expertise and the potential to turn their minority share into a majority one when Henry and Co do decide to relinquish control of the club.
From those in the US that the ECHO have spoken to, the preference is to keep hold of Reds in the absence of any enormous sums. The pursuit of an NBA team isn't new, it isn't something that has been arrived at following the reveal of FSG's willingness to seek investment and openness to offers for their full shareholding of Liverpool. The Reds are the most valuable asset in the FSG portfolio and have become something of a jewel in the crown; their only asset that gives them access to a global fan base.
Their willingness to keep hold of the club is unlikely to be determined by the need to raise capital for another venture; it is more about whether or not FSG feel that there are enough opportunities coming down the tracks for them to generate greater revenues and increase the value of Liverpool further. They have tried to be the agitators for change through the failed Project Big Picture and European Super League, but with FIFA wanting to expand their Club World Cup to a 32-team competition from 2025 there may be some road left to travel down yet.
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