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Private equity firm buys 17% stake in Kings

Arctos Sports Partners has reached an agreement to buy a 17% stake in the Sacramento Kings in a deal that values the NBA franchise at $1.8 billion, according to people familiar with the transaction. It is believed to be the largest private equity investment since the league loosened its rules in January to allow for institutional investors. It is the second NBA deal for Arctos, which was co-founded by private equity veteran Ian Charles and former MSG CEO Doc O’Connor, following a smaller investment into the Golden State Warriors in April.
The transaction is still subject to a vote by the league. The NBA committee that reviews transactions sent a memo to league owners Friday recommending its approval. Representatives for the NBA and Arctos declined to comment. A spokesman for the Kings didn’t immediately respond to a request for comment.
The NBA’s rules on private equity investors are as follows: A fund can buy as much as 20% of a franchise, and it may own equity in up to five teams. No team can have more than 30% of its equity owned by PE funds. Dyal HomeCourt Partners, a unit of Blue Owl Capital (NYSE: OWL), bought nearly 5% of the Kings earlier this year at a similar valuation.
Was it a hard decision selling your interest in the franchise? Shaquille O’Neal: It was very tough. Actually, heartbreaking. Trying to find loopholes around it, but couldn’t. I’ve always been one to follow the rules. The NBA’s been good to me, Adam Silver’s been good to me. I had a good conversation with Vivek, who is a brilliant businessman
Shaquille O’Neal put up enough money to reportedly grab a small percentage of the Sacramento Kings when they were last up for sale. Eight years and an exponential increase in the value of every NBA franchise later, O’Neal’s cashed out. Not because he’s fed up with the Kings, who just happen to have the league’s longest postseason drought at 15 seasons and counting. And not because he had a falling out with majority owner Vivek Ranadive. “It was awesome,” says O’Neal. “To just be in that position to have a piece of a team…I was a silent guy, though. I didn’t want to come and stand in the tunnel and tell Vivek “Do this, trade this guy, do that.’ Hopefully that will come in the future.”
Storyline: Shaquille O'Neal Business