25 Person NBA Ownership Rule

25 Person NBA Ownership Rule | Sport$Biz | Sports LawEffective October 21, 2014, the Board of Governors of the National Basketball Association (NBA) adopted new investment standards that limit the total number of persons that may own equity interests in an NBA member team. Now, the total number of persons that may own equity interests in an NBA member team shall not exceed twenty-five (25). In addition, no person shall own any equitable interests in an NBA member team of less than 1%, however the Commissioner does have the discretion to grant waivers of this requirement for management incentive arrangements. These investment standards are applicable to proposed transfers of NBA teams that occur after the adoption date of October 21, 2014.[1]

The new investment standards do not apply to NBA ownership groups that exceeded twenty-five (25) persons on October 21, 2014, provided that such ownership groups may be increased after the adoption dated by up to five (5) additional persons who make capital contributions that are used solely to fund the operations or capital expenditures of the NBA member or its arena affiliate.[2]

Some have referred to these new standards as the “Jay-Z Rule.” The Brooklyn born entertainer and entrepreneur held a miniscule (0.15%) interest in the Brooklyn Nets and the Barclay Center.[3] Then when he became a certified union agent Jay-Z further diluted his interest into two smaller stakes, one being sold to the now Milwaukee Bucks coach Jason Kidd.[4] Commissioner Silver in February of 2015 stated “[i]n terms of the new rule, yes, we passed a new rule at our last Board of Governors meeting. It was a bit of a formality, ownership groups cannot be comprised of more than 25 individual owners, and any individual owner in a team needs to own at least one percent of the team.”[5]

The NBA had been contemplating the change for years. The Milwaukee Bucks sale was approved in May 2014 from Senator Herb Kohl to hedge fund entrepreneurs Mark Lasry and Wes Edens. There are now approximately 37 individuals who own some portion of the Bucks.[6] Both Lasry and Edens sold small chunks of the team to friends, family members, and prominent members of the Milwaukee community—a key method for gather support for a new arena.[7]

Nearly $118 million of minority interests have been sold by Edens and Lasry according to a filing with the U.S. Securities and Exchange Commission.[8]

“We’re proud to have a diverse group of prominent Wisconsin community leaders in our ownership group,” Bucks spokesman Jake Suski said. “They all share a vision of not only building a championship-caliber franchise, but ensuring that the Bucks are impactful in the community and Milwaukee’s revitalization.”[9]

Nearly all the minority investors are from southeast Wisconsin but two of those announced are minority investors in the Milwaukee Brewers who live in other states.[10]

It is possible that the $118 million includes “substantial investor” Jamie Dinan’s investment as well as the investor who the Bucks have identified as the fourth-largest in the franchise: New York City real estate executive Mike Fascitelli.[11]

The following have been announced as minority owners of the Milwaukee Bucks:

ManpowerGroup executive chairman Jeff Joerres, Husco International executives Gus Ramirez and Austin Ramirez, Brewers minority investors Marc Stern and Adam Stern, Ted Kellner, the executive chairman of both Fiduciary management, Inc. and Fiduciary Real Estate Development; Keith Mardak, CEO and chairman of Hal Leonard Corp.; Milwaukee Brewers executive Teddy Werner; Milwaukee media and marketing firm owner Craig Karmazin; Kapco, Inc. president and Lakeshore Chinooks owner Jim Kacmarcik; commercial real estate owner and operator Mike Kocourek of Lake Geneva; Wisconsin Energy Corp. CEO Gale Klappa; Brookfield hospital and arena developer Jon Hammes; Palermo Villa, Inc. CEO Giacomo Fallucca; and a group of prominent African-Americans called Partners for Community Impact, LLC – comprised of fast food restaurant owner Valerie Daniels-Carter; Cory Nettles of Generation Growth Capital; Johnson Controls, Inc. executive Chuck Harvey; former Miller Brewing executive Virgis Colbert; and Michael Barber, EOO of a GE Healthcare unit in Wauwatosa.[12]


[1] NBA Investment Standards F

[2] Id.

[3] “The Jay-Z rule” – NBA raises bar for team ownership” by Net Income, January 30, 2015

[4] I NBA to introduce new “Jay-Z Rule” by Cameron Wilkkosz, February 2, 2015

[5] Adam Silver says Atlanta Hawks Sale Process is on Course by Kris Willis, February 15, 2015

[6] Say Hello to the Jay Z Rule: The New NBA Cap is on Ownership by Zach Lowe, January 29, 2015

[7] Id.

[8] Milwaukee Bucks Owners Have Raised Nearly $118 Million from Minority Investors by Rich Kirchen, January 29, 2015

[9] Id.

[10] Id.

[11] Id.

[12] Milwaukee Bucks Owners Have Raised Nearly $118 Million from Minority Investors by Rich Kirchen, January 29, 2015