The NBA could soon grow from 30 to 32 teams, as Commissioner Adam Silver revealed the Board of Governors is conducting an “in-depth analysis” into the potential economic impact of league expansion.
Speaking to reports on July 15 during the NBA Summer League in Las Vegas, Silver confirmed team owners have encouraged the league to continue the financial viability of the expansion.
Silver last addressed expansion publicly in October 2024, ahead of the start of the 2024/25 season. At the time, he said discussions had been limited while the league focused on finalising its new TV rights deal and the collective bargaining agreement (CBA). Now with those deals in place, expansion talks have returned to the agenda.
“If I were an owner, ultimately, what you’re considering is, is this additive to the league?” said Silver. “Additive can be measured in lots of different ways. There’s additives economically. But I think there is, from a competitive standpoint, how particular markets impact our national footprint.”
For several years, speculation has centered around two likely cities for expansion: Seattle, potentially reviving the former SuperSonics, and Las Vegas, a fast-growing sports market and current host of the summer league.
In February 2022, The Ringer Founder Bill Simmons stated he had “intel” the NBA was eyeing both cities for new franchises, with LeBron James reportedly interested in joining a Las Vegas ownership consortium if a team were awarded to the city.
NBA Expansion explained
The NBA has expanded since 2004 when the Charlotte Bobcats (now Hornets) joined the league. Interested buyers of an expansion team are required to pay an expansion fee, which was $300m for Charlotte.
The league takes into consideration a myriad of factors to determine the price of an expansion fee. This includes the average valuation of the existing NBA franchises, which has significantly increased over the past several years, and market valuation.
Recent sales such as the record $10bn sale of the Los Angeles Lakers and $6.1bn sale of the Boston Celtics this year, as well as the sales of the Dallas Mavericks, Phoenix Suns and Charlotte Hornets, suggest the NBA’s expansion fee will be significant.
In October 2023, Forbes’ average value of all NBA teams was $3.85bn, a ballpark figure for an expansion fee. However, this was before the new 11-year, $76bn TV rights deal was announced, which will have raised the average valuation even further.
Silver admitted to reporters in Las Vegas that “had we expanded five years ago, we would have underpriced the market”.
ESPN reported the NBA could receive a combined $10bn for each of the two expansion teams. This would mean the 30 current franchises would receive up to $300m each.
However, any expansion agreement is dependent on the majority approval of the current team owners at the Board of Governors, and one team owner is already reportedly against it.
The Ringer’s Simmons revealed several weeks back that New York Knicks owner James Dolan is against the idea of expanding the league and he “doesn’t want to share the media rights”.
While receiving $300-400m in the short-term will no doubt be beneficial to current owners, the long-term impact means that the rest of the league will earn less on its average earnings on TV revenue, as well as merchandise and sponsorship.
Does the NBA need expansion?
With ESPN reporting the league could expand by the 2027/28 season, it begs the question whether expanding to 32 teams is necessary.
When the NBA was first contemplating expansion in 2020, it was off the back of the league losing out on billions of dollars due to the Covid-19 shutdown.
Now with the league recovering, and franchise valuations at all-time highs, Silver and the NBA may deem this the right time to cash-in on the league’s international growth and financial strength.
An expansion may also be beneficial to NBA players. Due to the league’s new CBA, teams are placed with tighter salary cap rules, with fines increasing if teams spend more on salaries that exceed the first and subsequent second apron in luxury tax.
This in turn has seen some role players being paid less than previous years as teams prioritise resigning or signing superstar and core-level players. Talented role players or young players with limited playing time may be able to thrive on a new franchise with the addition of 30 new roster spots if the two expansion teams take effect.
