The Koch family’s investment in BSE Global, the holding company for the Brooklyn Nets and New York Liberty, is set to significantly reduce the company’s debt and demonstrates the strong demand for NBA investments. According to sources familiar with the transaction, the Koch family will be writing a $688 million check to the Tsai family, who currently own BSE Global. This investment will be used to pay off a portion of the company’s debt, including a shareholder loan of $550 million. The sale values BSE at $5.8 billion, with a post-transaction valuation of $6 billion.
The transaction, which values BSE at roughly 14 times revenue, is considered a premium for a non-control stake. The majority of BSE’s revenue comes from the Nets and Barclays Center, both of which have faced financial challenges in recent years. Despite this, the high valuation reflects the potential for growth in the NBA, particularly with the upcoming new media rights deal expected to be worth around $76 billion. This deal could triple the current value of national media rights for NBA teams, leading to a significant increase in revenue.
Some experts argue that the high valuation for BSE may not be excessive, considering the historical trend of revenue multiple expansion in sports investments. Over the past decade, the value of sports teams has increased significantly, with revenue multiples rising from 4 times revenue to 14 times revenue or higher in some cases. With the growing number of billionaires and the addition of new professional sports teams, there is potential for even higher valuations in the future. This perspective suggests that the Koch family’s investment in BSE could be seen as a strategic move to capitalize on future growth opportunities.
The NBA’s popularity and potential for increased revenue have made investments in basketball teams highly attractive to wealthy individuals and families. The Koch family’s decision to invest in BSE Global reflects their confidence in the long-term prospects of the Brooklyn Nets and New York Liberty, despite the current financial challenges facing the teams. The post-transaction valuation of $6 billion positions BSE as a valuable asset within the NBA ecosystem, with the right of first offer on any future control sale further enhancing the family’s investment.
Overall, the Koch family’s investment in BSE Global underscores the strong demand for NBA investments and the potential for growth in the sports industry. With the upcoming new media rights deal expected to drive significant revenue increases for NBA teams, the valuation of basketball franchises is likely to continue rising. This trend highlights the appeal of sports investments to high-net-worth individuals and families seeking to diversify their portfolios and capitalize on the growing popularity of professional sports. The Koch family’s investment in BSE Global is a strategic move that positions them well to benefit from the future growth of the Brooklyn Nets and New York Liberty within the NBA landscape.
