LaMelo Ball has not yet purchased the Australian National Basketball League’s Illawara Hawks despite claims from his manager that the transaction was a ‘done deal’. NBL commissioner Jeremy Loeliger said the proclamation was premature and that since Ball’s team went public with their intentions to buy the club the league has received “another two or three expressions of interest from very significant offshore investors as well as another two or three locals who have put their hand up to show interest.” Ball maintains he remains “absolutely committed” to purchasing the team he suited up for this past season.
Howie Long-Short: To be clear, whoever ends up ‘buying’ the Illawara Hawks is really acquiring a license to operate the franchise. NBL majority owner Larry Kestelman controls most of the team’s trademarks (in addition to the league marks). The Wollongong based club is currently under the NBL’s ‘voluntary administration’ after it took back control of the organization from previous owner Simon Stratford. The Illawara Mercury reported back in January that Stratford maintained a ‘significant debt’ with the league.
Historically speaking, operating an NBL team has not been a ticket to riches. More than 30 clubs have merged or folded since the league was founded in ’79. Former commissioner Rick Burton (’03-’07) explained that’s because before Kestelman (bought control of NBL for $7 million in ’15) took over, wealth maximization was simply not a priority for a large portion of team owners. “One of the realities of the NBL over its first 35 years was that there were a lot of utility owners – guys who owned teams for their ego or for the good of the community. They weren’t investors focused on asset appreciation.”
NBL teams are certainly more focused on the bottom line now, but that doesn’t mean they’re printing money. Burton explained that “the challenge is that the country’s land mass is roughly the equivalent of the U.S.’ lower 48 states (so travel is costly), but where we have 330 million people, Australia has just about 25 million. As a result, the size of the television contracts over there are just a small fraction of what American pro sports leagues can command.” There’s also limited ticketing revenue coming in (stadiums have +/- 5,000 seats and there are only +/- 14 home games/season) and since most teams play in publicly owned arenas (i.e. the team ‘owner’ doesn’t control the building) rent can be costly.
While the league has not disclosed how much they’re seeking for the Hawks, Burton suggested the value of the team is likely somewhere between one and two million U.S. dollars. The Syracuse Sport Management professor believes the affordable price point “is among the attributes that makes the franchise attractive to LaMelo. Not only is it a potential tax write-off, he’ll be able to cover the down payment with his first pro contract.” Assuming Ball is drafted within the top 5 selections of the 2020 NBA draft (as projected), he’ll earn no less than +/- $17 million over the first 3 years of his career.
Just because Ball can afford to buy the Illawara Hawks doesn’t mean that he should. As Burton explained “asset appreciation [for basketball teams] in Australia is a lot harder to realize [than it is within the U.S.] and in the short-term there are still costs to cover. Buying an NBL team is much more like buying a boat than an NBA franchise. Team owners pay a certain amount for the rights to operate, but then they have to start paying players, coaches, trainers and rent – and their only real source of revenue is sponsorships.” Considering Wollongong maintains a population of less than 300,000 people (comparable to Greensboro or Anchorage), it’s not as if there are a ton of major corporations to serve as tentpole sponsors within the market. As a result, “the franchise has always struggled [from a profitability standpoint].”
If Ball does end up buying the Hawks he’ll join a growing group of American basketball players with investments in NBL clubs. Al Harrington, Josh Childress, Shawn Marion, Dante Exum, and Matt Walsh all own stakes in Aussie teams.
Editor Note: Please note that joining our community (below) will entitle you to receive our free daily sports business email newsletter.