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Tips For Investing In The NBA

by Stacey Santos

Whether it’s playing a game at a local park or making it to some of the 1,230 NBA games played each season, it’s no secret that basketball fans are a passionate bunch. With hundreds of millions of people worldwide calling themselves fans of the NBA, the league’s value has exponentially increased in recent years.

Hundreds of millions of fans mean hundreds of millions of consumers and billions of dollars for the league. Rather than just looking for NBA picks, many of these fans spend money on other sides of the business. However, the question remains as to how fans and those interested in the league can invest in the brand.

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The NBA’s Private Realm

The NBA is not a publicly traded company, which is bad news for anyone who wants to invest in the league. Regrettably, many basketball enthusiasts cannot purchase shares on the open market.

The ownership structure of the NBA is more than just a bit complex. The league is not owned by an outside company. Instead, it’s owned by its 30-member teams, meaning the owners of each franchise have an equal stake in the business.

The structure of the NBA is surprisingly confusing as well. The league is a private company, but its constitution and statutes define it as an association. The Board of Governors makes decisions, and the relationship between members is contractual. In addition, the NBA is under the jurisdiction of the state of New York, where its headquarters are located.

Courts in various states have defined the NBA differently, depending on the issue being considered. Some have referred to the NBA as a joint venture, while others have described it as a single entity.

In addition to the league, most professional sports franchises are not publicly traded. There are a variety of reasons for this. However, the most important reason may be that most of the sports team’s revenue is used to pay players and coaches.

Alternative Investment Strategies

If one’s goal is to generate returns on investment, buying from the companies most closely associated with the NBA is probably one of the best options. In addition, the NBA and team sponsors earn income from the association indirectly, which can be an advantage for shareholders.

In terms of what the league made, during the 2020-2021 season, the NBA peaked at an estimated $1.46 billion in endorsement revenue alone. That comes from big corporations like Microsoft, the official technology partner of the NBA, American Express, and Nike, the exclusive apparel supplier to the NBA.

While sports leagues and franchises aren’t focused on profitability, the publicly traded companies that sponsor the NBA certainly are. The brand exposure gained from supporting the NBA contributes to top-line revenue and the bottom line, ultimately increasing the value of one’s investment portfolio.

Examples of publicly traded companies closely associated with the NBA include companies such as Google, Microsoft, Nike, State Farm, and Verizon. These are all strong companies with high-performance metrics in the consumer market.

Investors may also consider team jersey sponsors. Most of these companies are also publicly traded. For example, Sharecare, Vistaprint, Goodyear Tire and Rubber Company, Western Union, Mortgage United Wholesale, Rakuten, Motorola, FedEx, Motorola, Walt Disney World, and Sun Life Financial have all sponsored various NBA franchises.

Fans Can Get Some Action

The bottom line is that it’s not possible to invest directly in the NBA, but there are still plenty of options for fans who want a piece of the action. Investors focused on increasing their portfolio’s value can buy shares in the many companies that sponsor the NBA and its teams.

In the end, it’s about considering every single participant in the industry. This may take breaking down market patterns, sponsorship deals with individual franchises, and a more in-depth look at the league. 

However, it might be worth it in the end, considering how much revenue the league makes. Those participants around it also capitalize on the world’s most prominent professional basketball league.

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