(Bloomberg) — Red Bull GmbH is considering bidding for a new NBA basketball team, according to people familiar with the matter, in a move that would significantly strengthen the energy drink giant’s sports empire.
The deliberations, currently focused on a new franchise in Las Vegas, are internal and at an early stage, the people said, asking not to be named discussing confidential information. Price will be a considerable factor in any potential bid, they said.
“We generally do not comment on speculation about what we are or are not planning,” a spokesperson for the Austrian company said.
An NBA expansion team could cost more than $4 billion, especially in Las Vegas, which has been trying to attract sports teams to bolster its allure as a tourist destination. NBA Commissioner Adam Silver has said the league will turn to expansion after it completes a new round of TV rights deals. Las Vegas and Seattle are both considered favorites for new NBA franchises, with Mexico City also a contender.
Red Bull has significant experience running sports teams after having invested billions in the past years in both athletes and franchises. It owns two Formula 1 teams and football clubs including Major League Soccer’s New York Red Bulls and RB Leipzig in the German Bundesliga.
Its recent deals include buying part of English football club Leeds United and a controlling stake in the Bora-Hansgrohe cycling team. An NBA team would likely be one of its biggest assets.
It’s unclear how Red Bull would finance a bid, as it typically avoids taking on debt. However, the company has continued to grow sales in its main product. It sold more than 12 billion cans of its caffeinated drink in 2023, with net sales exceeding €10 billion ($10.9 billion) for the first time last year. Each of the last three NBA teams sold were valued at $3 billion or more.
Red Bull would compete with a number of rival suitors, including current and former NBA players such as LeBron James. Samantha Holloway, whose father made billions as the co-founder of TPG Inc., is putting together a consortium for a Seattle-based NBA team.
An NBA team controlled by a consumer company would be unusual. Most franchises are owned by operating entities acting on behalf of high net worth owners. The Boston Celtics, recently crowned champions, are owned by Boston Basketball Partners LLC, an investment group consisting of backers including private equity executives Stephen Pagliuca and Bill Egan. If Red Bull does decide to bid, any offer would need to be approved by the NBA.
Red Bull is overseen by Mark Mateschitz, who took over two years ago following the death of his father, Dietrich, the company’s founder. Mateschitz, who received a €582 million dividend last year, owns a 49% stake. Members of the Thai Yoovidhya family own the remaining 51%.
“Our growth plans for 2024 foresee a continuation of the positive developments so far, and — as usual for Red Bull — will be financed by operative cash flow,” the company said in January when reporting preliminary annual earnings.
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–With assistance from Marton Eder.
©2024 Bloomberg L.P.
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