Julia Koch and her family have made a significant investment in BSE Global, the holding company for the Brooklyn Nets and New York Liberty, showcasing the current success of the NBA. The Koch family will be providing $688 million to Joe Tsai, Clara Wu Tsai, and their family, who are the current owners of BSE Global. This investment will help to reduce BSE Global’s debt, with $492 million being used to pay off a shareholder loan and the remaining $196 million going towards the company’s balance sheet. The sale values BSE at $5.8 billion, with a post-money valuation of $6 billion.
This transaction values BSE at roughly 14 times revenue, which is a high multiple for a non-control stake. The majority of BSE’s revenue comes from the Nets and the Barclays Center, with the Nets being valued at $3.85 billion according to Forbes. Despite a bit of a loss during the 2022-23 season, the Nets continue to be a valuable asset. The new media rights deal expected from the NBA, worth around $76 billion, is a key factor driving the high valuation of BSE. With teams set to receive close to $300 million each annually under the new deal, the potential for growth in revenue is substantial.
The NBA’s increasing popularity and the potential for future revenue growth may justify the high valuation of BSE Global. Some sports investors have pointed out that the value of sports teams has largely come from revenue multiple expansion in recent years, rather than revenue generation. If teams traded at 4 times revenue 10 years ago and 10 times revenue last year, the possibility of reaching 20 times revenue in the future is not out of the question. With only two new Big Four pro sports teams added in the last 10 years and an increasing number of billionaires worldwide, the demand for professional sports teams may continue to rise.
The investment by the Koch family in BSE Global highlights the continuing attractiveness of NBA teams as valuable assets. The transaction not only helps to deleverage BSE Global but also provides the Koch family with a right of first offer on any future control sale of the company. With the NBA’s new media rights deal on the horizon, the potential for increased revenue for teams like the Nets and the Liberty is promising. Despite the high valuation of BSE at 14 times revenue, the ongoing growth in the sports industry and the demand for professional sports teams could justify such a price.
