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.