NBA Commissioner's Comments Defend the Indefensible Amid Ownership Scandals

Adam Silver defends NBA vetting process

When asked about Walter and whether his sale of the Lakers, the league’s premier franchise, just a year after he purchased it, represented a problem, Silver reportedly replied, ¨We found no red flags. To this day, these are… I call them allegations. There are issues to look into.¨

But he didn’t stop there.

Torre brought up the DOJ’s investigation into the Clippers and the SEC’s investigation into Walter before asking his question:

¨There has been a growing concern that wealthy individuals and entities are using the approval of the NBA to purchase credibility in the eyes of the public, meaning the fans. I am just curious if that growing concern is something that you share when it comes to the due diligence that follows the application of an owner or a sponsor and if you plan on changing anything about NBA due diligence processes because of that?¨

Adam Silver responded that he had never heard the vetting issue cast in that light, while acknowledging the truth of Torre’s statement that owning an NBA franchise helps previously faceless billionaires ¨become widely known,¨ thanks to the league’s profile.

But the word salad he uttered after that left many scratching their heads.

¨We take the vetting process very seriously. A lot of what we do is intensive database searching,¨Silver said in response to Torre’s question.

¨You would think in this day and age, with AI and everything else, that everything is centralized, and it’s not. In many cases, you are going state by state. In certain cases, people are part of industries that are regulated state by state, so we have to look there as well. We also talk to as many people as we can find who have knowledge about these people,¨Silver said.

Still, Silver says he is giving Walter the benefit of the doubt.

¨And we do interviews. But beyond that, I will say we are always reassessing to see if we can do more. But in fairness to the parties involved, even Mark Walter, as we sit here today, I know no more about him than I did when we vetted him. I read the newspaper articles, but in fairness to him, I don’t know where those investigations will come out. I don’t know where any government inquiries are going to come out. We are always seeing if we can do things better. But I don’t see a trend or some widespread issue among our principal owners that gives me cause for concern.¨

Adam Silver should be concerned

The average NBA franchise value recently reached a record $5.4 billion, representing 18% year-over-year growth, according to Forbes. As NBA Commissioner, Silver gets a lot of praise for that growth.

But unlike the NFL, the NBA is also experiencing an unprecedented level of ownership turnover in the modern era.

Nearly 25% of the NBA’s 30 franchises have changed ownership groups since 2020, including cornerstone franchises like the Boston Celtics and Los Angeles Lakers. There have been a whopping 23 change-of-control sales in the league since 2010, according to Front Office Sports.

Adam Silver has to wear that as well.

While that may not rise to the level of public scrutiny as a federal investigation into his owners, the problem with owner turnover is a clear indication that the NBA’s vetting process isn’t just fine, like Adam Silver wants us to believe.

NBA allows more private equity ownership 

Over the past few years, all of the major North American sports leagues have loosened their rules against private equity ownership, but the NBA has gone the farthest. 

Historically, the league allowed financial investors to passively hold equity interests in up to five teams, with individual fund ownership of a single franchise capped at 20% and aggregate multi-fund ownership limited to 30%. However, following a vote by the league’s board of governors last December, financial investors can now hold stakes in up to 8 teams.

Although the NBA has not publicly disclosed its rationale for this policy shift, the change is broadly viewed as a means of enabling franchises to access the capital necessary to meet rising valuations,” Neil Barlow wrote in a recent white paper for British law firm Clifford Chance.

But there are very obvious consequences to changing your criteria for ownership from “will this person be good for the growth of the league” to “does this person have enough money to keep runaway franchise valuations high.¨

From a high level view, Silver is overseeing the most lucrative league valuation expansion in its history, but the closer you inspect the situation, it’s clear that the NBA has lost the plot, and fans of teams that are getting sold and resold every couple of years are the ones who have to suffer.