Kansas City needs a billionaire to get an NBA team or it'll go to Las Vegas

It’s as simple as A-B-C-D.

That’s how former National Basketball Association team president Andy Dolich explained it when discussing the four things league owners will consider if they decide to add more teams.

“The A is avidity: the market you’re picking has to be an avid sports market,” he said. “The B is simple: Who is your billionaire? If you don’t have your billionaire, you don’t have anything. The C is the community: the elected officials, the leading businesses who are going to support you and the fan base. The D [destination] is where are you playing? The NBA is not playing in yesterday’s arena. Those are the four key parts.”

Last month, NBA Commissioner Adam Silver confirmed the league will examine adding two more teams, for a total of 32, helping owners overcome the 40% revenue hit Covid-19 continues to strip from them while most NBA arenas sit empty during games.

It would be the first time the NBA expanded since the Michael Jordan-owned Charlotte Bobcats, now the Hornets, in North Carolina started in 2004 at a cost of about $300 million.

This time, NBA owners could solicit $3 billion to $4 billion to add two new clubs. Teams stand to pocket up to $130 million each at that price range, and the money wouldn’t be shared with players.

Dolich, a former Memphis Grizzlies president, said the NBA would attempt to create its “horse race” over the next few years, preferring to leverage expansion talks. And Dolich knows how complicated these things can be. He helped the Grizzlies relocate from Vancouver, British Columbia, to Memphis, Tennessee.

Seattle seems like a sure bet to get an expansion club. The city lost its team in 2008 to Oklahoma City after arena problems.

The Amazon-named Climate Pledge Arena is the likely destination for a Seattle club. The city is wealthy enough to support the NBA and has corporate support. It would become a six-sports town, with teams in the WNBA, NFL, MLB and MLS. The NHL is adding a team, the Kraken, for the 2021-2022 season, too.

“I think it’s real,” the city’s mayor, Jenny Durkan, told Seattle-based NBC affiliate KING 5 of prospects the NBA may add a team there. “There’s no city that I think is better positioned to be successful. We’re going to have the best arena in the country.”

League chatter suggests hedge fund billionaire Chris Hansen could lead a potential ownership group and Seahawks quarterback Russell Wilson has long expressed interest in some ownership in a team.

That leaves one city for another team.

If we consider Seattle a lock, the next two cities that might host a new NBA team include Las Vegas or Kansas City. There’s a grassroots committee attempting to convince the NBA it should return to the latter.

Kansas City has a rich basketball history and housed the Kansas City Kings, which relocated to Sacramento, California, in 1985. And Kansas City Mayor Quinton Lucas already put the town back on the NBA’s radar when he lobbied for the Toronto Raptors to be placed there during the 2020-21 season.

Members of the grassroots committee, who spoke to CNBC on condition of anonymity since they’re in active discussions to present their plan, said the group wanted to name the team the Kansas City Monarchs to honor the Negro Leagues baseball team. But, that name has already been taken, according to Kathy Nelson, CEO of the Kansas City Sports Commission.

Nelson couldn’t reveal the parties who registered it due to privacy concerns. She told CNBC she’s aware of the grassroots committee and credited their “passionate ideas.” She also vouched for the T-Mobile Center, which has almost 19,000 seats, as a potential home.

“Our venue was built to house both an NBA and NHL team and still be one of the finest venues in the U.S.,” Nelson said, noting the building is walking distance from the “Power and Light District,” a residential, entertainment and shopping area. Nelson called the Power and Light District area, “the perfect setup.”

The committee told CNBC the city could create municipal bonds to raise funds for any required renovations.

But Kansas City’s main problem: it’s missing a billionaire.

“A progressive, committed, hard-working ownership,” said one NBA executive, who asked to remain anonymous as the person isn’t permitted to comment on league affairs. “That [Kansas City] marketplace is big enough and wealthy enough to support three top pro sports teams, I think, relativity easily,” the person said.

“I just don’t know who would be the owner, at least locally,” added Nelson. “Financially, what does that ownership team look like? That’s the billionaire-dollar question. It’s not a million dollar. It’s a billion dollars.”

Chiefs quarterback Patrick Mahomes, a minority owner of the Royals, appears to be interested in a potential Kansas City NBA club. The grassroots committee told CNBC they’ve identified other minority stakeholders but did not provide their names. The group also suggested building a new practice site near the Negro Leagues Baseball Museum.

But there are A-B-C-D concerns. How far sports fans and corporate money will stretch? The median household income in Kansas City is $54,194 compared with Las Vegas’ $56,354, according to U.S. Census data from 2015-2019.

Top companies, including Hallmark Cards and H&R Block, are based in Kansas City, and Nelson said the tech scene is emerging. And the NFL’s Chiefs, MLB’s Royals, MLS’ Sporting Kansas City, and the National Women’s Soccer League are already there. With NCAA college football and basketball also a big draw, consumers could be stretched too thin to support the NBA.

One billionaire could change things.

“If Kansas has that in their corner, and Las Vegas did not have a solid ownership group, then that could tilt the scales” said Patrick Rishe, sports business director at Washington University in St. Louis.

Behind the scenes, the NBA is aware of Kansas City’s interest and the feeling it’s on the list of horses to enter the race. While discussing the matter with CNBC last week, Rishe mentioned the lure of Las Vegas.

With sports gambling continuing to grow and the NFL’s Raiders and NHL’ s Golden Knights already in town, Las Vegas has emerged as the second favorite for possible NBA expansion.

It would join its sister league, the WNBA’s Aces, in the market. Likewise, the NBA Summer League already plays there. And the city has the 20,000 seat T-Mobile Arena to compete with Kansas City’s stadium.

“The fan support and corporate community are not as robust as Seattle,” Rishe said. “But the thing I like about Las Vegas is that it’s got this historical track record of hosting Summer League. So, you’ve got people in the community that are used to NBA basketball, that have a taste for NBA basketball and likely would show a proficiency.”

Las Vegas is top notch when it comes to live entertainment, but it also has the same “A-B-C-D “questions. The city is mainly dependent on tourism, which has dipped due to Covid-19. The economy is sure to endure future turmoil, raising the question if a new NBA team can survive in Las Vegas during a down cycle.

“It just reinforces the importance of the ownership,” said Rishe. “You’re going to need a very strong ownership group. The market that has the most financially viable ownership group, that will trump any other consideration.”

Again, Seattle is covered. The question now: What other city gets another NBA team?

Kansas City needs a billionaire. So does Las Vegas. Louisville, Kentucky, is also on the radar to potentially enter the NBA’s horse race. And once the race is set, it’ll be as simple as A-B-C-D on the expansion front.