The NBA’s plan to conquer Europe

The NBA is preparing to land in Europe. But behind the basketball, the real contest is largely economic, involving broadcasting rights, investment funds, arenas and new generations of fans. NBA commissioner Adam Silver has set a target: October 2027. Before then, however, it will have to become clear whether the NBA can strike a deal with the EuroLeague or whether the two systems will end up competing for teams, audiences and revenues. The early signs are not encouraging: the Europeans delivered their first rejection of the American project on 6 October. Offer rejected in Cernobbio In Cernobbio, on Lake Como, the EuroLeague’s 13 shareholder clubs rejected the NBA’s proposal to jointly create the new competition. Some at the meeting reportedly described the offer as “offensive” or even “colonialist”. The main sticking point was the money on the table: an initial payment well below €1 billion, to be divided among the 13 teams, followed by a system of bonuses that the European clubs considered too difficult to achieve. The meeting, organised by Olimpia Milano, was attended by all the clubs with voting rights in Euroleague Commercial Assets (ECA), the company that manages the competition’s commercial assets. They included Real Madrid, Barcelona, Olimpia Milano, Panathinaikos, Olympiacos, Maccabi Tel Aviv, Žalgiris, Fenerbahçe, Anadolu Efes and Bayern Munich, as well as the management team led by CEO Chus Bueno. Talks are continuing The initial rejection does not mean negotiations are over. Far from it. Talks are continuing. The draft plan for NBA Europe envisages 16 teams, 12 permanent members and four qualifiers. Silver has made clear that he does not intend to wait indefinitely. “This is a once-in-a-lifetime opportunity. It is a historic project for European sport.” He also confirmed that negotiations are continuing: “We are making progress in our talks with the EuroLeague. It would be better for everyone if we could reach an agreement.” The NBA and FIBA statement Following EuroLeague clubs’ rejection of the NBA’s proposal at their meeting in Cernobbio, the NBA and the International Basketball Federation (FIBA) issued a joint statement: “A partnership between the EuroLeague, FIBA and the NBA to unify the European basketball ecosystem would unlock the game’s enormous potential across Europe for the benefit of clubs, players and, most importantly, fans. The NBA and FIBA remain committed to moving forward with a new professional men’s league in Europe and helping build a stronger, more sustainable basketball ecosystem alongside partners who share our vision of growth, opportunity and the core principles of the European sports model.” The American model The NBA is ready to bring its American model to Europe: international broadcasting rights and arenas designed to generate revenue even when games are not being played, through hospitality, restaurants, shops, events and concerts. Cost controls would be central. The NBA links its salary cap to revenues and imposes a luxury tax above certain thresholds. The EuroLeague, by contrast, has traditionally given its shareholders greater freedom to invest. If it decides to go it alone and reject a partnership with the Americans, the EuroLeague is already planning to expand from 20 to 24 teams, with more stable licences and more predictable revenues — a model increasingly similar to a closed league. Andrea Bargnani, the former No. 1 NBA draft pick who is now executive adviser to Italy’s Lega Basket Serie A, sees NBA Europe as an accelerator. “It will be good for basketball. It will move capital around and bring in investors who otherwise would never have entered the system.” Gianni Petrucci, president of the Italian Basketball Federation, said: “What does NBA Europe mean? It means the most important brand in the world is investing in Europe.” As for the EuroLeague, he added: “We hope there will be an agreement. But if there isn’t, NBA Europe will go ahead anyway.” Maurizio Gherardini, president of Lega Basket Serie A, said: “This is an important opportunity. To seize it, we need to stick together.” US investment A report by consultancy iMark Holdings examines American investment in Italian sport. In football, US investors control more than a third of the country’s top-flight clubs. Oaktree owns 99.6% of Inter, RedBird owns AC Milan, the Friedkin family owns Roma, Rocco Commisso owns Fiorentina and Krause Group owns Parma, while Stephen Pagliuca and Bain Capital hold 55% of Atalanta’s holding company. In basketball, North Sixth Group/Matt Rizzetta owns 67% of Napoli, Newport Holdings owns 90% of Trieste, while East Coast Sports Investment Group/Ron Rowan holds a majority stake in Pistoia. The principle is straightforward: invest in clubs whose valuations are far below those of US franchises, then increase their value and revenues. Roberta Marcenaro Lyon, CEO and founder of iMark, says the picture extends to the Middle East. “The real story behind NBA Europe is not basketball, but the aggressive entry of Gulf investment funds, a trend we have already seen with football clubs such as PSG and Manchester City. With the NBA prepared to allow sovereign wealth funds to own 100% of a team, European basketball is set to become the new frontier of global sports finance.” The European legal system Several issues remain unresolved. How many competitions can European basketball sustain, both financially and in terms of audience size? And how will the NBA model fit within the European legal system? Luca Ferrari, global head of the Sports, Talent and Entertainment practice at Withers, explains: “The salary cap may fall within EU competition rules, but there is an exemption for collective bargaining, which underpins the EuroLeague system and, in Italy, the salary cap introduced in 2013 by Lega Serie B, which I worked on personally. “The same principle could also be used to adapt the trade system, with players giving prior consent to transfers. A centralised model could even coexist with the ‘sacred’ principle of sporting merit, including promotion and relegation.” This article was reviewed by an external translation partner