By Aris Barkas/ barkas@eurohoops.net
While talks among EuroLeague, FIBA, and the NBA are expected to continue, the plan to create a new league in Europe remains on track.
According to Eurohoops sources, the NBA and FIBA have made “measured adjustments” to their business plan, optimizing the proposed model for a new league.
Those updates were presented to the bidders for the 12 permanent franchises last week, as phase two of the process started.
The idea behind those changes is not only long-term success, but also reducing the financial risk taken by the franchises.
That’s why the NBA intends to invest more than $3B in support of the league and its teams, establishing a strong foundation for launch.
This capital, which is expected to come from the participation bids, will be reinvested in the league with a mix of direct financial support, operational expertise, and direct funding for grassroots basketball programming across Europe.
This includes league-level marketing, aiming to create a highly compelling and valuable commercial product from day one, plus guaranteed participation payments for every team from year one.
Those payments can start at $8M per club annually and will increase year-over-year, with escalators tied to the team’s participation and performance. The performance pool is money teams can earn according to regular-season victories and playoff results.
No distribution for the NBA owners
On top of that, while the NBA and FIBA would at first own 52% of this new structure, the participating teams would eventually have a majority equity stake following expansion in future years.
Neither the NBA nor its owners will take distributions during NBA Europe’s ramp-up period, which is expected to take years. On the other hand, the participating teams will have guaranteed revenues.
Those decisions are in line with a flexible way of thinking, as the project is still evolving, and the NBA knows that things in Europe can’t be an exact copy of how the league operates in the US. Of course, the best practices remain the same, but the fact that the investors will get revenues from Day 1 has created a positive response from the bidders.