The latest bids for NBA Europe franchises are due Monday afternoon, the next step in the league’s plan to raise billions to launch a new circuit in the Old World.
As the NBA and its bankers have engaged with dozens of potential buyers from around the globe—including sovereign funds, major soccer teams and wealthy individuals—they’ve also worked to build the internal framework of the league.
Borrowing elements from traditional U.S. leagues (salary cap, local media rights), and pieces more common in global soccer (performance-based revenue payouts, team-specific jersey deals), the NBA seeks to create a new enterprise to capitalize on what it views as a significantly underserved and undervalued market for basketball players, fans, investors and partners.
Sportico spoke recently with multiple people involved in building NBA Europe. Under the condition of anonymity, they broke down the economic structure of the league, which is planning to launch in October 2027. At the outset, league equity will be split 50/50 between the NBA and the owners of the 12 initial permanent franchises. League revenue, however, will flow overwhelmingly to the teams themselves, largely in the form of fixed distributions and performance payments, the people said.
The NBA is still finalizing how exactly to allocate the billions raised in the initial team sales, but much of it will be placed on the NBA Europe balance sheet for initial operating capital and reserves. As a result, the NBA is committed to funding all of the new league’s losses as it gets off the ground, the people said, insulating franchise owners from capital calls as the new entity tries to scale into a profitable, standalone operation. The NBA will take a cut of league revenue once there is positive net revenue, the people said.
Reps for the NBA, as well as JPMorgan Chase and Raine, the two banks it retained to help with the process, declined to comment.
George Aivazoglou, the managing director of NBA Europe, was at the Cannes Lions festival last week in France meeting with potential sponsors and agencies, and updating others on the league’s process. While he declined to comment on specific bidders, he said the interest from prospective buyers has been “tremendous.”
“There are a lot of existing teams from the ecosystem, some of the world’s biggest brands, some of them are multisport organizations—some are basketball only, some are football only—and all of them want to be a part of NBA Europe,” Aivazoglou said in an interview. “And the other component is professional investors—sovereign wealth funds, private equity, wealthy individuals, many from Europe [who] want to be a part of this process.”
The current plan is to launch NBA Europe next year with 12 permanent franchises and four clubs that secure rotating slots via competition in other FIBA circuits. For those first dozen teams, the group is speaking with bidders in Athens, Barcelona, Berlin, Istanbul, London, Lyon, Madrid, Manchester, Milan, Munich, Paris and Rome. That’s a footprint that intentionally indexes heavily on Western Europe, which has wealthier markets even if it might be further removed from the continent’s more ardent basketball markets.
The permanent franchise sales will produce billions in capital, with some bids involving London and Paris already topping $1 billion, sources said. While the NBA hasn’t finalized exactly how that money will be divvied up, the majority of it will be used to fund the league’s upfront costs and early operations, the people said. That includes team distributions, reserves, marketing capital and staffing. A portion could also be distributed to existing NBA owners as a dividend of sorts.
Equity in the new league will be evenly split at the start, with NBA owners holding 50% and the 12 permanent team owners holding the other 50%. That’s similar to how the WNBA was structured from an equity perspective back in 1996, but there are big differences in how those two leagues handle expansion and revenue distributions. For one, if NBA Europe were to add more permanent teams in the future, it would dilute both groups on a pro rata basis, meaning that the NBA would eventually own less than 50% if the league were to grow.
As part of the NBA’s push to make NBA Europe a hybrid of business practices in both the U.S. and abroad, teams will also have a slightly different set of commercial opportunities, the people said. There will be local media packages for teams to sell, they said, but also team-specific jersey deals not currently allowed in the NBA, which has a 12-year, league-wide deal with Nike. Teams will also keep the vast majority of ticket sales.
NBA Europe’s central revenue will include bigger media packages, league-wide sponsorships, merchandise and licensing opportunities, and perhaps some infrastructure projects. Those revenues will be largely transferred back to the teams, essentially via a preferred distribution, the sources said. Initially, more than 80% will go to teams via a fixed payment made to all clubs (similar to the NFL’s annual distributions) and a performance pool, which will filter more money to teams based on their on-court success.
That’s an example of league economics modeled more on traditional European soccer than the NBA or other U.S. circuits. In the first six years the league is planning more than $1.5 billion in fixed and performance distributions to its clubs, one source said. The rotating clubs will share equally in those payments, per sources.
The NBA and its bankers have told prospective buyers that they expect the league to be profitable within its first decade, sources said. Once there is positive net income, that leftover money will be distributed on a pro rata basis relative to the equity structure, the people said.
That means that if the league sees a $200 million profit in its fifth season, and the equity structure is still 50-50, NBA owners and NBA Europe owners will each see $100 million of those equity dividends. If the league has $400 million in net income in its seventh season, but the league has expanded to 16 permanent clubs, then the NBA will see about 43% of that money, or $171.4 million.
The bids due Monday afternoon are being evaluated on the expansion fees, of course, but also on each group’s overall plan. Principal in that is its arena strategy. Even the biggest European markets are vastly behind the U.S. in arena infrastructure, so new owners will likely either heavily renovate existing buildings, stand up new ones, or both. The NBA could conceivably partner in some of those projects, the people said, though nothing has been decided.
There’s also the possibility that some bidders will look to purchase existing teams as part of their push for NBA Europe inclusion. Given the fact that bid complexity (and number of bidders) will vary widely by market, the league is expecting to announce winning groups in a staggered manner as they’re finalized, the source said.
Some successful bidders could be announced as early as the coming weeks.
