Dyal HomeCourt Partners is nearing an agreement to purchase a minority stake in the Atlanta Hawks in a deal that values the NBA team at about $2 billion, according to people familiar with the negotiations.
It’s the latest NBA investment for the firm, now a division of Blue Owl Capital (NYSE: OWL). Some of the team’s minority partners were approached recently by principal owner Tony Ressler, who asked if they were interested in selling all or some of their holdings, according to one of the people, who was granted anonymity because the matter is private.
It’s unclear how big the stake is—firms are allowed to buy up to 20% of NBA franchises. A spokesman for the Hawks declined to comment. A representative for Dyal HomeCourt didn’t respond to a request for comment.
Dyal HomeCourt, which partnered with the NBA last year, already holds stakes in the Sacramento Kings and Phoenix Suns. While most private equity firms are prohibited from owning equity in more than five franchises, Dyal has a unique relationship with the league that allows it hold more.
Last December, Dyal said it was seeking $2 billion in capital to deploy across NBA teams. The fund had $200 million in assets under management as of October, according to an investor presentation.
The Hawks are owned by a group led by Ressler, co-founder of investment giant Ares Management. They purchased the team in 2015 for about $730 million, a price tag that doesn’t include $120 million in outstanding bonds used to construct the team’s arena. The Hawks were valued at $1.83 billion in Sportico’s most recent rankings, No. 20 among the league’s 30 teams.
Led by budding star Trae Young, the Hawks made the Eastern Conference finals last year, a run that will boost ticket sales, sponsorship and merchandise revenue. That success, coupled with a planned $5 billion real estate development next to the arena, helped boost the team’s valuation 19% over the past year, according to Sportico’s numbers. Only the Los Angeles Clippers (+20%) had a bigger year-over-year jump.
The NBA recently changed its ownership rules to allow for private equity investment, a way for owners to access capital more easily, and make minority stakes easier to offload. Other leagues, including MLB, MLS and NHL have made similar changes. No NBA team can have more than 30% of its equity owned by private equity, and no fund can own more than 20% of any one team.
Dyal isn’t the only private equity group investing in NBA teams. Arctos Sports Partners has purchased small stakes in the Golden State Warriors and the Sacramento Kings; Sixth Street invested in the San Antonio Spurs.
Blue Owl is the merger of two asset managers, Dyal Capital and Owl Rock Capital, which were combined and brought public earlier this year in a SPAC acquisition.
With reporting from Kurt Badenhausen.