NBA changes PE rules ahead of proposed $12.5bn Lakers acquisition

The NBA is changing its rules governing private equity investment in franchises, clearing a potential regulatory hurdle for the proposed $12.5bn acquisition of the Los Angeles Lakers by Joshua Kushner and Bob Iger, according to a report by Bloomberg.

Under the revised policy, a private equity firm and its executives will be permitted to invest in the same NBA franchise, according to people familiar with the change. The amendment would enable Kushner and Iger to commit personal capital alongside investment from Kushner’s Thrive Eternal as part of their purchase of the Lakers.

The NBA reportedly declined to comment, while Thrive Eternal reportedly did not respond to requests for comment.

Kushner and Iger agreed last month to acquire the Lakers at a reported $12.5bn valuation, which would set a record for the value assigned to a professional sports franchise. The proposed ownership structure subsequently raised questions over whether Thrive Eternal could participate financially given Kushner’s role at the firm and the league’s previous restrictions on private equity executives investing alongside their firms.

The NBA already permits private equity funds to acquire minority interests in multiple franchises. Under the revised rules, however, a private equity firm that invests in a team alongside one of its executives would be prohibited from holding an interest in another NBA franchise, according to people familiar with the policy.

The change could also expand the pool of potential buyers for NBA teams as franchise valuations have climbed, increasing the amount of capital required to acquire controlling interests.

The new framework could be relevant to existing NBA owners with private equity backgrounds. Atlanta Hawks owner Tony Ressler, co-founder of Apollo Global Management and Ares Management, could potentially sell stakes in the franchise to either firm because neither currently holds an NBA team interest.

Other NBA owners with private equity connections include Josh Harris, a co-founder of Apollo, and David Blitzer, who previously worked at Blackstone. Boston Celtics owner Bill Chisholm is associated with technology-focused investment firm Symphony Technology Group.

Institutional private equity participation in the NBA has also expanded through dedicated investment vehicles. Arctos Partners, Blue Owl’s Dyal HomeCourt Partners and Sixth Street have all completed transactions involving NBA franchises or related sports assets.

The Lakers transaction remains subject to approval from the NBA Board of Governors, with a decision potentially coming later this year.