Another private investment firm has made its way into the growing stable of National Basketball Association teams’ minority investors.
On Tuesday, Dyal HomeCourt Partners, a division of the $52.5 billion alternative asset manager Blue Owl, announced that it had made a minority investment in the Phoenix Suns.
The deal is the first of its kind for Blue Owl, which was formed in December 2020 after Dyal Capital Partners and Owl Rock Capital Group agreed to merge and go public via a special purpose acquisition company sponsored by an affiliate of HPS Investment Partners. Dyal already owned a minority stake in both Owl Rock and HPS.
“We are delighted to partner with Robert Sarver and the Suns organization as HomeCourt's inaugural investment,” said Michael Rees, Blue Owl’s co-president, in a statement. “The Suns have made incredible strides both on and off the court in recent years and we believe that, under Robert's leadership, the best is yet to come.” Robert Sarver is the Suns' majority owner.
When the SPAC deal was announced in December, Blue Owl said that it had formed an exclusive partnership with the NBA, under which it would be the sole pre-approved buyer of minority stakes in the association’s 30 teams. “We believe having these approvals and waivers already established will provide selling owners with more certainty of our ability to close on any investment and will make us the buyer of choice when a minority interest in an NBA franchise becomes available,” Blue Owl stated in its S-1 filing in June.
A Growing Asset Class
Since then, a number of investors have invested in NBA teams, including Arctos Sports Partners, which Sportico reported acquired a minority stake in the Golden State Warriors in May.
Sixth Street and billionaire Michael Dell, meanwhile, joined the San Antonio Spurs’ investor group as strategic partners in June, according to an announcement from the time. Sixth Street has its own ties to Blue Owl, as Dyal made a minority investment in Sixth Street prior to the merger — a deal the latter opposed.
The deals point to growing institutional interest in making sports investments, resulting from a confluence of factors that Institutional Investor previously reported on. First, sports team valuations have been on the rise, making it difficult for individual investors to buy an entire team. And although sports leagues were once reticent to allow private equity firms in, they have since changed their tune.
“The injection of institutional capital into the NBA will be a tremendous benefit to the league and its owners and the Suns are proud to be Dyal HomeCourt's first investment,” said Sarver in the announcement.
Rules and Regulations
But investing in an NBA team is not without challenges. The NBA does “impose significant restrictions” on what investors can and cannot do, according to the S-1. The association has approval rights over Dyal HomeCourt’s deals and the admission of new investors. The NBA can also change its rules without prior notice to the fund.
What more, sports leagues require investors to take passive stakes and use a hands-off approach to ownership, II previously reported.
Blue Owl has ties to the NBA beyond this first investment. Blue Pool Capital, a multi-family office that reportedly manages the fortune of Alibaba's Jack Ma and that of his cofounder Joe Tsai, is a large investor in the company, a 13-G filing shows. Blue Pool’s chief executive officer, Oliver Weisberg, was briefly the interim chief executive officer of the Brooklyn Nets and is now the NBA Alternative Governor for the team, the NBA’s website shows. Tsai is the sole owner of the Brooklyn Nets.
The firm is part of a network of wealthy families that have invested in Blue Owl. Among them are CH Investment Partners, a multi-family office partnered with the family of the late Texas real estate magnate Trammell Crow’s, and Iconiq Capital, another multi-family office that reportedly has managed Sheryl Sandberg’s and Mark Zuckerberg’s wealth, other 13-G filings show.
A spokesperson for Blue Owl declined further comment on the news.