Thunder's Tumultuous Ownership Journey
Market Offering Fails: Up for Grabs was an Oklahoma City Thunder stake, but potential buyers apparently declined the opportunity.
The Oklahoma City Thunder's route to the NBA Finals was not just a spectacular display on the court, but also a compelling story off it. Boasting one of the youngest rosters in the league, they astonished with a record-breaking season and propelled their owner's investment by a staggering 10x.
For years, investors shied away from seizing a share of the Thunder, even a fifth of the team. Finally, the shares, previously held by the estate of Aubrey McClendon, a fracking baron and co-founder of Chesapeake Energy, were obtained by the current ownership group.
McClendon, initially part of Clay Bennett's group that bought the Seattle SuperSonics in 2006, was fined $250,000 by Commissioner David Stern for expressing his intention to move the team to Oklahoma City. In 2007, McClendon was labeled "America's most reckless billionaire" by Forbes, stepping down as Chesapeake CEO due to scrutiny surrounding significant corporate governance issues and personal dealings. Later on, he died in a car crash in 2016, just a day after being indicted for bid rigging.
Upon McClendon's demise, he owned roughly 20% of the Thunder and had used the team as collateral for loans. Given the stake's high value, starting at $950 million as per Forbes, creditors were keenly interested in its sale. Potential investors carefully considered the Thunder stake, with the estate eventually enlisting Inner Circle Sports to manage a formal sale process.
The difficulty in selling such large LP stakes lies in the hefty price tag accompanied by limited decision-making authority and additional perks. Moreover, Oklahoma City ranks as the NBA's third-smallest market in terms of footprint, and the Thunder's performance historically fell short of expectations before their latest winning streak. Despite these challenges, the current ownership— spearheaded by Clay Bennett— ultimately secured the stake.
Franchise values have seen a dramatic rise ever since, particularly for those with lower revenues, as a result of the NBA's new 11-year, $77 billion TV contract. This agreement has led to substantial increases in team earnings, providing a much-needed financial boost.
Notably, the Thunder are on track to reap the benefits of this deal, with an estimated annual payout increase to $137 million in the first year, soaring 33%. By the final season of the contract, the payout will total $297 million – a sharp leap from the $103 million paid out this past season.
As of 2024, the league's get-in price for a new team is estimated at $3.06 billion, as per Sportico. Meanwhile, the Thunder's own valuation sits at $3.55 billion, placing them 24th in the league.
The Thunder's current success has been underpinned by a roster featuring recently crowned MVP, Shai Gilgeous-Alexander, who will command an enormous salary once his contract extension is up. By June 2023, SGA will be eligible for an extension worth up to $380 million over five years.
City support has been instrumental in covering the financial burden of these new deals. Voters approved the extension of the one-cent MAPS (Metropolitan Area Projects) sales tax in December 2023, which will allocate $850 million towards a new $900 million arena slated for completion in 2028. The remaining costs will be covered by the Thunder's ownership.
In pursuit of these objectives, the city has endorsed three primary goals: benefiting city residents, meeting NBA specifications, and maximizing the team's revenues to sustain professional sports in Oklahoma City.
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- People interested in investing in the Oklahoma City Thunder, one of the youngest teams in the NBA, might find the team's valuation appealing, as it has seen a staggering 10x increase following a record-breaking season.
- The financial sector, especially those engaged in real-estate and sports, would be intrigued to learn that the Thunder's current valuation stands at $3.55 billion, making it one of the three most valuable teams in the NBA, despite being in the league's third-smallest market.
- Investors involved in basketball and the NBA could be curious about the financial impact of the league's new 11-year, $77 billion TV contract, which has led to substantial increases in team earnings, providing a much-needed financial boost for teams like the Thunder.
- For those following the NBA, knowing that the Thunder's star player, Shai Gilgeous-Alexander, is eligible for a contract extension worth up to $380 million over five years, could signal potential implications for team finances and the league's financial landscape.
