NBA May Be Preparing to Announce New Standalone European Basketball League

NBA May Be Preparing to Announce New Standalone European Basketball League

64 European born players appeared on National Basketball Association rosters last season, including some of the leagues’ biggest stars (see: Giannis Antetokounmpo, Nikola Jovic, and Victor Wembanyama). And an estimates 270 million basketball fans populate countries across the continent. 

However, the NBA reportedly brings in just a ‘few hundred million’ dollars a year in Europe.

The time difference makes it challenging for the league to monetize its existing assets across the pond at a level on par with basketball fandom in the market–or its growth ambitions. To fully realize the opportunity in Europe, the NBA likely must establish a new, independent ecosystem there (see: Basketball Africa League). 

Raine Group suggested an independent league-operated venture could bring in as much as $3 billion annually.

Historically, EuroLeague’s existence has made the pursuit of that kind of endeavor challenging. The biggest clubs in Europe participate in the pan-European competition in accordance with 10-year licenses. 

But those licenses are set to expire following the ‘25-’26 season, and sources indicated that the NBA cut ties with EuroLeague following failed partnership discussions earlier this year.

Speculation now exists that the NBA is gearing up to announce plans for a new league consisting of teams in Western Europe and the Middle East. The belief is each franchise could command fees between $750mm and $1 billion.

The NBA did not respond to request for comment on the rumors.

However, Commissioner Adam Silver told the AP late last week that the league is in discussions with FIBA (the sport’s governing body) about creating a new annual tournament or NBA-operated league on the continent.

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The NBA’s European takeover started ~40 years ago with former NBA commissioner David Stern. The league has since sold media rights and sponsorships in Europe, developed intellectual property, digital assets, and played games there, and established grassroots programs in a multitude of cities.

Political, federation-related realities, and a lack of NBA-quality arenas have prevented further expansion across the pond (outside of the NBA Europe Live Tour, which ended in ’12).

“But more than anything else, it’s been the cultural realities,” one source familiar with the dynamics at play said. “Sport in Europe is about everything but making money. Owners abroad are investing for stature. They're doing it for political clout. And the pro leagues there have been very slow to change that mentality.”

For context, EuroLeague clubs reportedly collectively lost over €150mm last year. 

Now, that is partly because the league and its existing assets are under-monetized. 

EuroLeague Ventures, a JV between EuroLeague and IMG, reportedly generates less than €90mm/year from the sale of media rights, betting, league sponsorships and events. It probably should be generating closer to €150mm/year.

But a massive gap also exists between basketball’s popularity in Europe and the economic intake that currently exists there.

EuroLeague is an 18-team league’. 13 of the clubs are shareholders with licenses to participate on an ongoing basis (i.e. no promotion/relegation). That list includes FC Barcelona, Real Madrid, Bayern Munich, Fenerbahçe, Panathinaikos and Maccabi Tel Aviv. 

The other five receive wildcards or gain entry as EuroCup winners (EuroLeague’s secondary competition).

It is popular in several European markets. Basketball is the number one sport in both Lithuania and Serbia, and it’s no worse than second in Greece and Turkey (and in Israel).

The problem is there is relatively little money to be made in those countries. And EuroLeague has struggled to materially build fandom in larger and wealthier Western European markets (think: Spain, France, England, Germany).

Historically, there has also been a dearth of quality arenas to play in, and league leadership has oftentimes maintained an adversarial relationship with FIBA.

FIBA, EuroLeague, and the NBA held a series of meetings earlier this year to discuss a commercial collaboration and how to go about capitalizing on the economic opportunity that exists.

“The NBA ultimately proposed bundling EuroLeague and FIBA’s commercial assets with its own,” one insider said. “But EuroLeague was not prepared to cede control to the NBA.” 

The challenge EuroLeague CEO Paulius Montiejunas faced in presenting the proposed solution is that the 13 stakeholders’ actual owners are rarely in critical league meetings, instead they send proxies with limited business experience (think: a general manager). It is simply not part of the culture there for ownership to actively participate.

So, the decision was left to folks whose priority is to win, without concern for profits and losses–or bottom-line issues. 

The anti-NBA sentiment that has long existed wasn’t helpful, either. EuroLeague clubs believe the league is feeding the NBA its best players and not being fairly compensated for their role in developing them. 

The NBA terminated further discussions with EuroLeague after its offer was rejected. Shortly thereafter, word leaked that it was exploring other options in Europe (and the Middle East). The league reportedly hired Raine Group to model out a business and structure that would work. 

It did so cognizant of EuroLeague’s 20+ year head start in the market. Clearly, it is not concerned.

That’s likely because it understands EuroLeague’s license holder agreements will soon expire. 

While the NBA is never going to try and actively poach EuroLeague teams, the reality is that several of the clubs could end up coming to them.

“Real Madrid has been drooling to be a part of the NBA for years, going back to David [Stern] knowing Florentino [Perez],” one source said.

And if Real Madrid jumps, FC Barcelona and several other licensed Western European clubs could follow, as well as some unlicensed teams in key markets like London, Paris, Berlin, and Valencia.

It is very possible that when the dust settles, EuroLeague ends up migrating to Eastern Europe.

There is heavy speculation that the NBA’s new league or competition could include markets outside the European Union too.

Sovereign wealth funds in the Middle East are not going to balk at the NBA’s asking price. So, don’t be surprised if Doha (Qatar owns a minority interest in the Washington Wizards) and Abu Dhabi (the city hosts annual preseason games) end up with clubs too.

It’s fair to wonder why NBA owners would want to stand up yet another league. WNBA and G-League teams still lose money in aggregate, and a new entity abroad is certain to suffer steep losses for an extended period too.

But there is a belief that the domestic opportunity may be close to maturity (or will be after the league places new franchises in Seattle and Las Vegas). Global expansion can be a catalyst for future growth.

Technically, the NBA started this effort years ago with NBA China. Of course, geopolitics have slowed growth in Asia.

And three years ago, the league stood up the Basketball Africa League in partnership with FIBA. But Africa is a slow growth market. 

Europe and the Middle East have the potential to fulfill comparable economic promise over a shorter time period.

The NBA has the resources, business acumen, influence, and platforms (see: new deal with Amazon, which now gives it a global content distribution platform) to properly monetize strategic markets in Europe. That includes the lucrative mixed-use real estate opportunities that come with improving the venue situation.

“OVG, AEG, and ASM are all really active in Europe,” one source reminded.

The NBA also has the ability to bundle a new property’s content and IP with its existing assets, which should help to maximize values (see: WNBA rights).

And it’s not as if the NBA owners are going to be funding this new entity and its losses on their own. They have existing relationships with several private equity and sovereign wealth funds. 

The NBA does believe a new standalone league will eventually become profitable.

“The younger generation of Europeans relate to basketball, and particularly the urban culture that comes with it,” one source said. “And that demographic is beginning to generate and spend income.”

EuroLeague has been working to raise capital of its own (the league reportedly hired LionTree). But it’s hard to envision smart money backing the property until/unless its core partner clubs extend their licenses, and it has a beat on the NBA’s next move.

The latter could come soon.

“It won’t be a surprise if the NBA comes out and makes an announcement that it is standing up a new league in Europe and the Middle East in close cooperation with FIBA in the near future,” one source said. 

It’s worth mentioning that NBA deputy commissioner Mark Tatum sits on FIBA’s board.

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