NBA expansion talk heating up

While the NBA’s Conference finals are making surface-level headlines, tectonic plates are shifting underneath the NBA’s crust. On Tuesday, the NBA’s scuttlebutt radar detected signals that could alter the composition of the league. If a report from Portland 750 AM host and Oregonian sports columnist John Canzano are accurate, the NBA is positioning itself to enact expansion into Las Vegas and Seattle as soon as the league’s current media rights deal expires in 2024.

In March, NBA insider Bill Simmons also leaked rumors of the league looking into expansion to Seattle and Vegas. Simmons’ insider gossip threw the Fenway Sports Group, owners of the Boston Red Sox, and LeBron James’ names into the mix of figures interested in owning the vanity project that is an expansion franchise. Of course, Simmons being a product of Boston likely has links within John Henry’s organization. The connection to LeBron is obvious due to LeBron’s partnership with the Fenway Sports Group’s impressive ownership portfolio of the Red Sox and Liverpool. If LeBron can’t play with his son Bronny, maybe the next best thing is having a significant ownership stake in the franchise he plays for?

However, Canzano’s insider info stems from details derived from the Paul G. Allen trust, which was established in 1993 and contains the late billionaire’s pro sports franchise assets. Reportedly, Allen’s sister Jody Allen, who has assumed control of both the Portland Trail Blazers and Seattle Seahawks, is keen on selling the Blazers in the next 6-18 months.

Canzano expressed in his report that a sitting team president of an NBA franchise believes that the league’s owners are “unlikely to allow the Trail Blazers to relocate to Seattle after their sale.” The major takeaway is that the prevailing sentiment was that Seattle and Las Vegas had been earmarked for NBA expansion as the league’s next multi-billion dollar domestic television rights deals are renegotiated.

The NBA’s 30-team structure has remained stagnant for almost two decades since the league awarded an expansion franchise to Charlotte. Expansion to Seattle in particular, would be the second instance of the NBA making amends for a relocation mistake they made in the early 2000s. Awarding Charlotte a franchise in 2003 was penance for the original Hornets co-owners George Shinn and Ray Wooldridge, cutting and running to New Orleans.

Seattle houses franchises from every major professional sport except the NBA. Atoning for relocating the Seattle SuperSonics to Oklahoma City in 2007 has been on the NBA’s to-do list for 15 years. Seattle hedge fund manager Chris Hansen’s 2013 bid to buy the Sacramento Kings for $625 million and relocate them was unsuccessful, but a valiant attempt to right a wrong. Alternatively, the NBA’s focus on planting permanent roots in Vegas is rooted in an eye on the future. The NBA was one of the first leagues to embrace Vegas with its Summer League; and Team USA training camp is held there every summer.

Earlier this year, the Oak View Group, an entertainment business development and sports management group, led the redevelopment of Seattle’s KeyArena and announced plans to build a $1 billion arena in Vegas that is projected to be completed in 2026. Oak View will use 25 acres for its resort and arena and the other 41 acres for an entertainment district encompassing the 20,000-seat arena. OVG’s $3 billion arena construction is putting the cart before the horse, but it’s good business. It took two years between the Charlotte Bobcats being awarded to Robert Johnson over Larry Bird’s group to the franchise’s debut season in 2004. A 2024 announcement and an arena ready by 2026 would put the OVG’s arena opening in time for the hypothetical Vegas franchise’s inaugural season.

In remarks at the CAA World Congress of Sports last October, Silver suggested expansion was on the docket down the line.

“It isn’t right now, but at some point, no doubt Vegas will be on the list.” Silver explained.

Don’t read too much into his apprehensiveness. The windfall from expansion fees prospective owners will be required to pay will also appeal to owners who vote on expansion. The expansion fees for the original Charlotte Hornets, Miami Heat, Orlando Magic and Toronto Raptors was 32.5 million. By 1994, the Toronto Raptors and Vancouver Grizzlies were paying $125 million and Johnson coughed up $400 million for the Bobcats.

Welcoming two new franchises based in major cities into the fold means they’ll have more leverage in negotiating their next TV deal and those new ownership groups will potentially have to pony up a combined $5 billion in expansion fees to be spread among the league’s 30 existing franchises. Even when adjusted for inflation, NBA franchises will recoup more than enough from these fees to compensate for the billions of dollars in losses they incurred during the pandemic. Once these two franchises are smashed into the bloated 30-team league, the NBA’s domestic expansion will likely come to an end for the near future.

There are so many smoke signals we have smog. Silver’s coyness about potential expansion is reminiscent of the mood in 2002 when expansion to Charlotte also appeared improbable because of concerns about whether their venues were NBA-ready. Vegas and Seattle won’t encounter that obstacle. Curiously, the T-Mobile Arena in Las Vegas just opened in 2016 as a multi-purpose indoor arena and serves as the home venue for the NHL’s Golden Knights. Apparently, that arena won’t be shared as Vegas’ new NBA cathedral will contribute to the sports venue arms race.

The only apprehension for the NBA to consider should be whether they’ve maxed out with 30 teams and if 32 creates diminishing returns by sending their competitive balance off a cliff. Two additional franchises mean stretching revenue-sharing and diluting the talent even further. With all due respect to Toronto and Vancouver, the NBA hasn’t teased this type of expansion to multiple marquee destination cities since 1989 when Miami, Charlotte, Minnesota and Orlando joined a 23-team league.

If the NBA is a luxury bachelor pad its Board of Governors have been trying to mash as many teams as possible into, globalization is a family home with a yard. Further development within the United States to cities like Louisville, St. Louis or Nashville won’t attract enough of a financial advantage to offset the financial burden of adding yet another franchise. The NBA will run out of cities to conquer in North America, if they add Vegas and Seattle franchises as its eighth and ninth new members since 1988.

In 2019, the NBA staged regular-season games in Mexico City. The league also announced its second-ever regular-season game in Paris, France for next January. One of the hindrances to a team in Europe was attracting stars, but we now live in an NBA landscape where a generation of NBA superstars might consider signing with a European-based franchise to play closer to their families. If Silver and the owners have a future appetite for expansion in the years after expanding to Vegas and Seattle, its next steps would be overseas or into Latin America. But we’re putting the cart way before the horse now. However, if Vegas and Seattle come to fruition, NBA Pangaea is the only frontier left.