League Officials Have Floated Possible $2.5 Billion Expansion Fee

NBA commissioner Adam Silver said in his preseason press conference last month that the league has become more open to the idea of expanding beyond its current 30 teams. While Silver cautioned that expansion isn’t “on the front burner,” a report on Tuesday from ESPN’s Brian Windhorst suggests there have been some discussions about the concept in the league office.

According to Windhorst, officials have “floated” a price tag of $2.5 billion as a potential expansion fee for two new teams in the near future.

Expansion fees – which are paid by the incoming franchises – are split equally by the NBA’s current teams and aren’t shared with players. That means two new franchises paying $2.5 billion apiece could result in a $160MM+ windfall for each of the league’s 30 existing clubs, Windhorst notes.

It’s not clear whether that $2.5 billion projection is a realistic one, but the NBA “knows its business and its bidders,” according to Windhorst, who points out that multiple groups based in cities like Seattle and Las Vegas could have interest in establishing a new NBA franchise and could be motivated to meet the league’s asking price in an expansion scenario.

With a number of current teams accumulating debt during the coronavirus pandemic, interest in the idea of expansion has increased, Windhorst writes.

Still, team owners looking to make up for lost short-term revenue should be wary of pushing to do so via an expansion fee. As Mavericks owner Mark Cuban and others have pointed out, that expansion fee is essentially a loan that will be repaid over the years via revenue sharing if teams are receiving 1/32nd of the league-wide pie instead of 1/30th.

newest oldest

76 thoughts on “League Officials Have Floated Possible $2.5 Billion Expansion Fee

  1. The Howler

    There are bigger cities than some current NBA cities that could support a team and make a 1/32 cut bigger than a 1/30 cut if the two new teams made the “pie” a lot bigger.

    • x%sure

      It could be worked out mathematically, converting future dollars to dollars at the time of sale. Not too difficult. The fact Cuban does not have this figure ready with his comment suggests it does Not support his argument.

      He’s probably just a bored viewer too, like Silver. It’s not wrong, it’s just a game, and people get older.

  2. Little_Dunker_45

    This is troubling news… that they’re even considering it means the league is in real financial trouble. Oh brother my head hurts!

    • This makes zero sense. Considering expansion means the league is doing well, not poorly. Contraction would mean the league is in financial trouble.

      The league is really popular right now, and I guarantee you some billionaire or group of investors would happily pay the $2.5 billion price tag to start a franchise. The league would have several options. If they chose two teams, how would a $5 billion influx of cash mean there’s financial trouble?

      • Little_Dunker_45

        Based on Cuban’s comments it sounded like they were going to explore other avenues before resorting to, what the article mentions, a loan.

        They are not expanding to grow the league, they are looking for a quick influx of cash to offset all the money they’ve lost due to covid. The ultimate goal is to grow, but until now owners preferred not to do it via expansion because it splits the revenue.

        The fact that they are considering this options means immediate cash is more important, which is why I worry.

    • There’s no way a potential owner is paying 2.5 billion to try to get into a league that’s in financial trouble. NBA owners rake. It’s a business remember?

      • Little_Dunker_45

        Which owner are you talking about? As far as I know no one has paid anything yet. It’s a number the league made up.

        Ask the guy in Minnesota if he’s getting 2.5 billion for his team?

        • I’m using the number from the article above…Yes it’s pretty high number just for a fee to get in. Goes to show you the competition for the open spots. Every time a team comes up for sale there’s like 10 groups who want in.

          • Little_Dunker_45

            From earlier today twolves story: “I think Glen was hoping team values were still going up,” another team owner told ESPN. “I think we’re finding out they may not be right now.” He was getting 1.5 which was lower than he wanted.

            • That’s including the team debt. I don’t know what that number is but if the buy-in is 2.5 maybe the Wolves have one billion in debt? Just guessing…

  3. Lakers1

    Seattle definately deserves a team.. they were screwed out of the SuperSonics years ago and the nba needs to make that right.. I think Seattle and vegas will be the 2 teams.. then pelicans and another team will move to East conference..

      • mcmillankmm

        Only need to move 1 team to East if 2 are added to West….Minnesota might make most sense from a geographic standpoint…they are on an island there in the Northwest

        • harden (mvp),wall, and wood

          Minnesota makes a lot more sense. They’re much closer to Chicago, Milwaukee, and Detroit. LA fans always have trouble with math.

  4. brownscavsr4me

    Tampa Bay is the largest TV market available for NBA team, but I feel that Florida doesn’t need another team. Seattle should be a given (since they were sort of cheated out of an NBA team, and because they are the next largest TV market behind TBay).

    IMO I would say St. Louis, Pittsburgh, or….call me crazy, another team in Canada deserve a team. According to the link I’ll put below, Montreal is the 18th largest TV market in North America, and Vancouver is 22nd.

    I personally don’t like the idea of another Las Vegas team. They are the 37th largest market, and there are more cities desperate for NBA team larger than them.

    link to thinktv.ca

    • hiflew

      With all the logistical problems for the Raptors right now, I don’t think the NBA needs to expand outside the US.

    • ChiSoxCity

      Las Vegas tourism on the strip (non-covid) makes it more lucrative.

      Also, Pittsburgh, St. Louis, Ohio cities (besides Columbus) and the like are losing population. They can’t really sustain more professional sports teams. NBA is losing popularity as a whole, the last thing it needs is more watered down teams struggling for lottery picks and 8th seed playoff slots.

      • x%sure

        Why go to Vegas just to watch an NBA game?— they sell gambling and ritziness there. Other cities have pro BB.

    • phnxdark23

      Agreed about Florida and LV, but I can’t imagine they’d go the Canada route. The Grizzlies already failed in Vancouver, and we’re seeing with the pandemic that teams in a foreign country can introduce potential issues that we hadn’t previously considered. I like Seattle and St. Louis personally.

    • Appalachian_Outlaw

      Las Vegas and Seattle should be the teams. Las Vegas is a destination point. Not only do you get a solid base in LV, but you’d also get a strong visitor base.

      • x%sure

        You meant a small base. Not only is Vegas small, there is nothing around nearby.

    • imo, Florida doesn’t make much sense. The Rays said the same thing about large markets and look how that’s turned out.

      Florida in general is difficult to predict for sports. They have a few of the worst fan bases in their respective sports (Marlins/Rays, Panthers, Jaguars) but also some well-supported teams like the Heat.

      In addition, the market is already saturated in Florida for basketball. The Magic and Heat were (somewhat recent) expansions; I don’t see Florida supporting three NBA teams.

      imo, Seattle, Vegas, St. Louis, and Louisville are the top contenders.

      As an off-the-wall suggestion, I’d put out Albuquerque. ~30th largest city in America (bigger than KC, Sacramento, Miami, and Atlanta, at least currently; Miami and Atlanta are fast-growing). It’d be the only team in New Mexico (like the Thunder for OKC) and the city has moderate- to good growth. The NBA has done well in some remote-ish western cities like OKC and SLC. If they wanted to really experiment, Albuquerque could work. Of course, if they wanted something safer, there are much better options.

      • KnickerbockerAl

        I’d be very careful with the SW U.S.A. Houston third largest city by population. Doesn’t support Rockets when they are losing.

      • martevious

        Um, you better look again. Albuquerque could have a larger city population than Miami or Atlanta, but they both have a metro area 6 times larger than Albuquerque. It’s the metro population that matters, not the city size.

      • x%sure

        Look up MSA figures… the Federal gov’t makes and uses these. City plus suburbs.

        Vegas 28th, Albuquerque 61st… because there is not much outlying.

        The largest non-pro-sports area is around Riverside, CA, east of LA, 13th. But it has no prestige, and anyone who paid for a franchise would want to move it into LA. Even San Diego franchise owners want to move to LA.

        List of non-NBA MSAs:
        S Diego #17 (the franchise must not be allowed to move to LA like before… Angels, Chargers, Clippers),
        Seattle #15, Orlando #18 (but close to #23 OrlandoMagic),
        StLouis #20, KansasCity #31 (KC would be a hotspot),
        Pittsburgh #27, Cincinnati #30 (not so hot spots).

        I would vote Seattle and Missouri. It may not be legal to restrict the San Diego buyer. PIT & CIN have a lot of outlying population, but demand is an issue.

  5. Redwood13

    So this is how they can pay the top star’s (and not so top) $500,000 per game, the tickets still still be going up. Soon $200 to $300 tickets each to see a game. I read years ago if the San Antonio Spurs did’t make the play offs they would lose money. Teams won’t be able to fill the seats. If the Spurs can’t make money how about the other teams? The owners won’t stay in something when there is no profit

  6. metsie1

    Yeah, with so many non competitive teams already this is just what the NBA needs right now. More teams! Oh, brother.

    • hiflew

      They don’t really care about competition, they care about making money. New franchises means new money for the league and 2 more areas where local fan bases (ie more money) can be cultivated for future revenue.

      It might seem cynical, but it’s still true.

    • The Howler

      Making more teams “competitive” is as easy as expanding the playoffs.

    • Appalachian_Outlaw

      Teams aren’t non-competitive because of the number of markets. They’re non-competitive because 2 and/or 3 superstars so often want to play together on the same team.

      • Little_Dunker_45

        Okay then the league has been non-competitive forever. Enough of the superstars argument. Magic and Kareem. Bird, McHale, Parish. It’s not a new phenomenon.

        • Appalachian_Outlaw

          Ok, so I’m not old enough to have seen much of the names you mentioned, but I’m pretty sure those teams weren’t built by those guys saying “trade me” because I can’t win a ring by myself. Olajuwon never asked to be traded to Chicago so he could play with MJ.

          • Little_Dunker_45

            How about wilt chamberlain?

            “Havent seen…pretty sure…” if you’re going to argue a point at least do your research. Frankly you’re embarrassing yourself.

            • brownscavsr4me

              Let me guess, you’re right and have all the right answers? You know you can have discussions about opinions without you demeaning other people.

              • Little_Dunker_45

                I’m happy to be wrong, but when the response is based simply on bias and not fact I won’t dignify the position.

            • Appalachian_Outlaw

              Embarrassing myself? Here is something I know for fact, I’m not getting paid to research 70s and 80s NBA, so I’m not going to scour the history of basketball. Please don’t call me out on this, because I don’t know LeBron’s phone number to confirm this, but I’m pretty sure he appreciates your contributions.

            • martevious

              Little_Dunker_45-Generally speaking of the era you are talking about, teams were not built on superstars demanding to get out of town. Magic and Kareem; Bird, McHale; Stockton, Malone. Those guys stuck with their teams.

        • Lionel Muggeridge

          Those players didn’t decide to come together for a ring. McHale and Bird played for Boston as rookies and Parish was traded there after Bird’s first season. Magic was drafted by the Lakers. And Kareem had gotten there 4 years earlier

          • Little_Dunker_45

            I was replying to the post that said the problem was superstars all being on the same team. How they get there is irrelevant.

            • x%sure

              Dunker that was not the point. The point is in the hapless OP, where Metsie automatically thinks the new franchises will Not be competitive. Outlaw just tried to make a funny; criticize him for humor if you must.

              Metsie the league average win percentage will be 50% NO MATTER HOW MANY TEAMS.

  7. lambeau gang

    Is the $2.5 billion including the cost of a new arena for an expansion team? If not, that limits the potential franchise destinations to either a locale that already has a functioning arena or a city that has the means to build
    a new arena.

      • The Howler

        No, owners wait a few years and then extort one from the public by threatening to leave. There are, however, fewer places to relocate to in the US.

  8. One should be seattle, for sure.
    I agree the second would be montreal, that is not vancouver: there are 4-5 Quebecois who play in nba… And would be in the East, so not move

    • Appalachian_Outlaw

      It should not be an Eastern city. Both clubs should be placed in the West so New Orleans can move into the East.

      • It can absolutely be an eastern city if that’s where the population and fan support would be. You don’t divide this out geographically with the sparse West.. all the population is in the east. Yes, I would say Seattle but then another sensible Market without regard to east or west.

        • Appalachian_Outlaw

          There are plenty of western cities with large population bases. I just think it’s weird to ask a club in Memphis or New Orleans to play a bunch of conference games in California or Oregon when you could put two teams out west. If you can argue there aren’t two cities anywhere out west that would support a team, then okay, I’ll buy your argument.

          • Yep that’s the question. I’m sure the NBA will spend billions researching it LOL

            • Appalachian_Outlaw

              That is the billon dollar question. Ha! And I know there are some good eastern cities that could support one, too. I just think two western expansion teams with a NO or Memphis shift east helps 3 markets? Maybe a NO or Memphis fan can weigh in if the time zone thing is a pain? As you said though, the NBA will surely spend researching it. :)

  9. stretch123

    Seattle and Las Vegas definitely make the most sense but how about Baltimore, Nashville or Pittsburgh if not Vegas?

    • Lionel Muggeridge

      Nashville is definitely on the up but I don’t know if it’s big enough yet

      • x%sure

        Vegas is probably what Cuban was talking about. Balt, Nash & Pitt too. It’s Seattle & something.

  10. How about San Diego? 7th or 8th largest city in the entire country. Lost the Clippers when Sterling illegally moved north. All they need is an arena. I think the Clippers were well-supported back in the day so it might work. Seattle and San Diego.

    There’s been different groups years ago trying to get an NBA team back in America’s Finest City but I haven’t heard much talk of that the last 10 years.

    • Little_Dunker_45

      Most of those people are likely already Lakers or Clippers fans (or GSW bandwagoners). Cali is a great market but with 4 teams already I don’t know how much room there is for growth.

  11. DeathbyDeathwest

    Folks, let’s start the bidding at 2.5. Do I hear a 2.5? 2.5? 2.5?

    Alright, 2.49! Can I get a 2.49? 2.49!…

  12. KnickerbockerAl

    “SuperSonics” ….. for sure. Then Canada should get one. Right now is not a good idea for this. World needs to get back to normal. Then we can analyze the numbers then. Dudes for 2.5 billion. It better come with land and stadium. Also when are Jazz giving back NO their name. Name should stay with cities.
    Seattle has to be first in line.
    Most populated cities in Canada As of 2020 listed
    1- Toronto
    2- Montreal
    3- Calgary
    4- Ottawa
    5- Edmonton
    6- Mississauga
    Vancouver is 10th largest . Don’t know Canada except that Hockey is major sport. Seems Montreal would be a good choice. World city

    link to google.com

    • The Howler

      Quick…name the top 3 jazz musicians from Utah. Total agreement there. LAL needs to give back the Lakers name to Minnie, as well.

      • hiflew

        The Lakers have spent 60+ years building their brand name, why would they give it away? For that matter, the Jazz have spent 40+ years building their brand name as well. Who cares about whether it makes sense or not, the brand is built.

        • DeathbyDeathwest

          I agree there’s no going back, but there’s nothing wrong with imagining the alternate universe we’re missing out on. And the whole concept of carrying titles from town to town is ridiculous.

          And for Howler – I got Joe McQueen. But I cheated out of curiosity and still only got to one.

        • KnickerbockerAl

          Really and the Jazz are this marketing wonder, in Utah. There is no marketing when your name makes no sense. Worse it has no ties or symbolism to the city you represent. Just like Hornets made no sense in NO. Lakers are a brand cause of their success. Not cause all the Lakes in LA. Yes they have had it a long time now. And it’s not a racist thing like Wash football team. But They could change to a more appropriate name today. And still be as marketable. Lakers actually should of done this yrs ago and lead the way. The name belongs to the city as much as team. If not more. Fact city’s pay for it by giving them stadiums and tax breaks. Plus the income of the fans in the city. Should really make this argument. Long overdue imo. And TimberWolves is a much better name and logo than Minneapolis Lakers.

  13. washington_bonercats

    Financials aside why is it that the main two cities people talk about Seattle and Vegas. If expansion does happen there can obviously be only of those cities and another in the East. I think we bring back the Sonics and the Bullets and call it a day

  14. GangGreen23

    Lots of Options here:

    Could resurrect two teams that moved away and restore their Original names:

    – Pittsburgh Pipers (from the ABA days)
    – Virginia Colonels ( also ABA )
    – Buffalo Braves
    – Seattle SuperSonics

    Could return two teams to Cities that lost theirs:
    – St. Louis
    – Kansas City
    – Cincinnati
    – San Diego

    New locales:
    – Vegas
    – Louisville
    – Boise

    • hiflew

      Virginia was not the Colonels. They were the Squires. Kentucky was the Colonels.

  15. cryptonerd

    Minnesota and Memphis to the east.
    Las Vegas in pacific.
    Phoenix moves to southwest
    Seattle in the northwest

  16. Gary Porter

    This league is losing money. TV viewership is not coming back. Baseball cannot sell their middle of the week games to a network. Regular television is done. People watch movies on streaming services. Expanding while losing money is stupid. I predicted in 2000 that major league sports would be bankrupt by 2040. It’s coming sooner. You keep paying ridiculous salary while boosting the price of going to a game. A family of 4 will not pay 150.00 to see a game.

Leave a Reply