Jaylen Brown signed the largest contract in NBA history. But it's nothing compared to how much teams are going for.
Brown signed a five-year extension for just over $300 million this week. It's the largest contract in NBA history, but it won't be for long.
His super-max extension starts at 35 percent of the salary cap, which means next year's super-max deals will be worth even more. And the reason Brown's deal is so large is because league revenues are skyrocketing, as are franchise values.
The completed sale of the team -- purchased at an approximate $3 billion valuation — will be executed in the next one-to-two weeks, sources said.
— Adrian Wojnarowski (@wojespn) July 23, 2023
Michael Jordan sold majority control of the Charlotte Hornets valuing the franchise – one of the worst in the NBA since it joined the league – at a number of $3 billion. Say what you will about Brown, but he's proven to be much better at basketball than the Charlotte Hornets..
Mat Ishbia paid $4 billion for the Phoenix Suns, 10 times what Robert Sarver bought them for in 2004. Four years ago, Tilman Fertitta bought the Houston Rockets for a then-record $2.2 billion and now the record is nearly double.
The franchises are worth so much that the NBA is running out of individuals who can afford to dole out $50 million annual salaries, much less afford a whole team. Which is why the recent sale of a piece of the Washington Wizards, Mystics and Capitals to the Qatar Investment Authority may be a harbinger of the NBA's future.
The sovereign wealth fund of the State of Qatar bought five percent of Monumental Sports & Entertainment, the organization's parent company, at a valuation of over $4 billion. When teams and players are this expensive, monarchs often become some of the rare few who can afford it. For example, Al Hilal, owned by the Saudi Public Investment Fund, reportedly offered a $332 million transfer fee and $775 million salary to soccer star Kylian Mbappe.
Commissioner Adam Silver says that the NBA won't allow a sovereign wealth fund to own a franchise outright (Qatar's investment in the Washington teams is passive.)
New ESPN story: In the wake of Qatar’s sovereign wealth fund buying a minority stake in the Wizards, Adam Silver says a sovereign wealth fund won’t control an NBA franchise anytime in the foreseeable future.
— Tim Bontemps (@TimBontemps) July 11, 2023
“There’s no contemplation right now.”https://t.co/MiX9l7wgzd
Silver may not be able to foresee a future where a sovereign wealth fund takes over, but he probably didn't foresee $300 million contracts a few years ago, either. But looking at other sports makes the rise of sovereign wealth funds look inevitable: the LIV-PGA Tour merger or the world of soccer, where Qatar also owns Mbappe's current team, Paris Saint-Germain F.C..
Jaylen Brown cashed in this week. How long will NBA owners resist the chance to cash in themselves?
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