Insider Sport takes a look at how the US’ four major sports leagues operate an expansion model, including the NFL, the NBA, MLB and NHL
The four major US sports leagues – the NFL, NBA, MLB and NHL – all operate closed leagues, meaning no teams can be relegated from the league, nor can any team outside these leagues be promoted into them.
This is a far cry from the football leagues in Europe and South America, but US sports has a significant focus on maintaining profits, continuously adding capital which has seen the capitalistic market of the US create the most valuable sports teams in the world.
But if no teams can join the closed leagues via promotion or relegation, how do more teams get added to US sports leagues?
This is done by a process known as expansion, where new teams can be added to join existing teams which usually comes with an expansion fee attached to buy the new team.
Each of the four major US sports leagues primarily operate a similar expansion process, but with a few minor differences depending on the league’s structure and the current owners’ vote on whether they would like to add more teams to the league.
NFL
The most-watched and valuable North American sports league, the NFL, is also one of the largest due to expansion and the merger with the American Football League (AFL) in 1966.
Prior to the AFL-NFL merger, the NFL had 16 teams, whereas the AFL had 10 teams. The merger brought the total number of teams in the NFL to 26. Since the merger, the NFL has awarded seven expansion teams, with the most recent being the Houston Texans in 2002, becoming the league’s 32nd team.
There has not been an expansion awarded since 2002, and that is because the current NFL owners generate considerable revenue from media rights. Adding additional teams to the league would see their percentages decrease.
However, if the NFL was looking into the market to increase the number of teams in the league, it would first start with the NFL Finance and Business Ventures Committee evaluating revenue projections and the sporting impact adding expansion teams would mean for the league.
This would then be passed onto a vote amongst the 32 NFL team owners, which would require a minimum 24 ‘yes’ votes for the league to proceed with the process.
The NFL would then identify certain markets for expansion, and make a call out to prospective investors to bid individually or as part of a consortium. The NFL would then audit the bidders’ feasibility, capital, liquidity and worth to assess their worthiness of owning a team.
Bidders would also need to commit to providing an NFL approved stadium to house home games for the expansion team. If there is no existing stadium, a new stadium would therefore need to be built and gain the approval of state governments.
Once bidders are approved and accepted as owners, ownership must then appoint a team President and General Manager to lead day-to-day operations.
They must also oversee the construction of the team roster, which is done for new teams via an expansion draft. An expansion team is granted the ability to select players from existing NFL rosters, but certain – predominantly a teams best players – are protected and not eligible to be selected.
Expansion teams are also given the highest odds in the forthcoming NFL Draft to help build out their roster and secure young talents that could secure long-term success and sustainability.
NBA
When the NBA was established and had its inaugural season in 1946/47, the league only had 11 teams.
Fast forward to the present day, the league is now looking to add two more teams to take its total to 32 teams, with franchises being earmarked for Las Vegas and Seattle.
The NBA expansion process begins with the Commissioner and his officials to determine whether the league can financially support an additional team(s) in the league. This is typically determined by the league’s revenues, with the league’s media rights deal a key factor.
For example, once the NBA agreed to its new 11-year, $76bn media rights deal that started in 2025, this gave the league confidence to support two additional teams via expansion.
The process then goes to the NBA Board of Governors – made up of all 30 NBA team owners. At least 23 owners must vote ‘yes’ to support the league in its process with expansion.
This will then give the indication to prospective bidders to begin talking with the NBA on their ownership model, their financial and structural plans for the expansion team, as well as ensuring the market chosen for the team is viable, the market has an NBA suitable arena to house home games, and the ownership can ensure the necessary capital for long-term sustainability.
The expansion fee is a key hurdle for any owners looking to acquire an expansion team in the NBA.
Firstly, the prospective investors must agree on a figure based on the value of the market and how much NBA owners will receive equally. Reports suggest that the expansion fee for the proposed Las Vegas and Seattle expansion teams lies between $7bn to $10bn.
The expansion fee paid out by a prospective investor for a team would then be split equally amongst all NBA owners. For example, if Las Vegas receives an expansion team, with its owner paying out $10bn for the team, each NBA owner would receive $333m.
However, the addition of one, even two, expansion teams means current NBA team owners will now have to share media rights revenue, with its percentages being diluted. This can often cause NBA team owners from voting ‘no’ to expansion teams in order to secure more revenue long-term.
If 23 team owners vote ‘yes’ in a final vote once expansion fees are agreed upon, the prospective investors will become owners of the expansion teams.
The league will then enter an NBA Expansion Draft, where each of the current NBA teams must select up to eight players to protect from availability for the expansion draft, whilst the remaining players become available for the expansion teams to select to join their rosters.
If Las Vegas and Seattle were to be awarded NBA teams in the future, they would compete in the Western Conference. In order to keep the balance and have 16 teams each in both conferences, the nearest geographical Western Conference teams to the East would then be relocated to the Eastern Conference, which would potentially be between the Memphis Grizzlies, New Orleans Pelicans, and Minnesota Timberwolves.
MLB
Similar to the NBA, the MLB has been discussing internally to expand the league to 32 teams.
The MLB’s expansion process is similar to the NFL and NBA. It evaluates the financial incentives to add additional teams, identifying the relevant markets to house an MLB team, ownership suitability, and a 75% vote to approve the owners and the expansion team.
However, the process must also go through the MLB Player’s Association (MLBPA). The MLBPA is the main reason why the MLB remains the only North American sports league without a salary cap and is viewed as the strongest player’s union across the region.
Expansion team owners must negotiate with the MLBPA on their commitments to their labour rights agreement. This is necessary because additional teams in the league means a lower overall percentage for all teams of media rights revenue.
The MLBPA also questions the travel demands due to the location of the expansion team, and how the owner intends to manage the salary payroll and the expansion draft.
NHL
The NHL’s expansion process is broadly similar to the NFL, NBA and MLB.
Prospective owners must apply to become an NHL owner by having the necessary capital and the market value being in line with the league’s standards.
The proposals are examined by an Executive NHL Committee before it can then progress to the Board of Governors, which requires a 75% approval rate.
The new owners are then granted the team to which they can then appoint a President and General Manager, as well as team branding, colours and logos.
In a NHL Expansion Draft, existing teams can protect seven forwards, three defensemen, and one goaltender. Alternatively, they can protect eight skaters and one goaltender from being drafted by an Expansion team.
