(Bloomberg) — The NBA is amending its private equity policy to allow a firm and its executives to invest in a franchise at the same time, according to people familiar with the situation.
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The shift will allow Joshua Kushner and Bob Iger to invest their own money alongside capital from Kushner’s Thrive Eternal in their purchase of the Los Angeles Lakers, said the people who weren’t authorized to speak publicly about the change.
The NBA declined to comment. Thrive didn’t respond to requests for comment.
Kushner and Iger reached a deal last month to buy the storied franchise at a record $12.5 billion valuation. But questions arose about how Thrive Eternal would support the sale, since Kushner runs the company and NBA rules previously forbid an institutional investment firm supporting its manager’s purchase.
The NBA allows funds to acquire minority stakes in several teams. But under this new amendment, if a firm has money in a team with one of its executives, then it can’t have any ownership in another franchise, the people said.
The rule shift might boost the bidders for teams because, with valuations surging in recent years, it’s become harder for a potential owner to come up with the funds to buy a controlling stake.
The change will allow owners like the Atlanta Hawks’ Tony Ressler, who co-founded Apollo Global Management and Ares Management, to sell stakes to both firms since neither private equity group has stakes in an NBA team.
Other private equity billionaires in the NBA include Josh Harris, who also co-founded Apollo and his partner David Blitzer, who comes from Blackstone, and Celtics owner Bill Chisholm, of Symphony Technology Group.
Outside of individuals, the league has seen private equity transactions from firms like Arctos Partners, Blue Owl’s Dyal HomeCourt Partners fund and Sixth Street.
Iger told Bloomberg in August that he and Kushner didn’t make any calls reaching out to potential investors to support the bid because of how quickly it came together. Since then the pair have been in the process of adding limited partners.
The Lakers deal still needs approval from the NBA’s Board of Governors, a sign-off that could come later this year.