NBA Expansion Series: How NBA Expansion Works

Keith Smith
Keith Smith, Resident NBA ExpertNovember 22, 2023
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For a year or so, the off-court priority for the NBA was on hammering out a new Collective Bargaining Agreement. That’s now in the rearview mirror.

Now, the NBA’s focus has turned to negotiating new media rights deals. That’s on both a national and a local level. The national rights deals that are currently with Disney (ESPN, ABC) and Turner (TNT, NBA TV) are up after the 2024-25 season. That means negotiations are already underway, with more potential partners entering the fold when the exclusive window for Disney and Turner ends.

On the local level, Diamond Sports Group’s bankruptcy is impacting the regional Bally Sports networks coverage of the league. The NBA and Diamond Sports Group reached an intermediate agreement for coverage this season, but it looks like season’s games could be handled differently for roughly half of the league’s teams.

Right behind the new CBA and the new TV deal, the NBA has expansion pushing in. Gone are the days of NBA commissioner Adam Silver saying the league isn’t looking at expansion. He’s not even saying things like “We might dust that off at some point”, as Silver did during the pandemic.

Silver has said for a while that the league “could” look at expansion after the CBA negotiations and the media rights deals were complete. That’s now turned into multiple times when Silver has said the NBA “will” look into expansion after the media rights deal is complete, now that the CBA is finished.

That doesn’t mean expansion is coming in the next year or so. But NBA expansion is coming. That much is clear.

Roughly a year-and-a-half ago, we wrote it's time for the NBA to expand. Everything in that article holds up today. There is labor peace, the league is deep in talent, interest in the league is high and Seattle and Las Vegas still loom as suitors for the NBA.

With all of that said, let’s take a look at how NBA Expansion would work. This is the first in a series related to NBA Expansion that we’ll run over the next several years, until the league actually does expand. Today, we’re going to outline the timeline and the process. After that, we’ll get into the fun stuff of how an Expansion Draft actually works.

The Expansion Timeline

Whenever the NBA does decide it’s time to expand, it won’t be an overly quick process. When the original Charlotte Hornets relocated to New Orleans, it happened at the end of the 2001-2002 season. The NBA underwent an expedited process to expand and to get a team back into Charlotte as quickly as possible.

The league began taking bids almost immediately (mostly to avoid a lawsuit related to the relocation of the original Hornets), and in mid-December of 2002 they picked Robert Johnson’s bid as the winner. In January of 2003, the NBA Board of Governors approved Johnson and the new team.

In June of 2003, the team was named the Bobcats. Approximately a year later, on June 22, 2004, the 2004 Expansion Draft was held. And the team took the floor at the start of the 2004-2005 season.

That was a quicker turnround than the previous time the league had expanded. When the original Charlotte Hornets, Miami Heat, Minnesota Timberwolves and Orlando Magic joined the league, there were three-year (for the Hornets and Heat) and four-year (for the Timberwolves and Magic) gaps between the league announcing expansion and the start of play.

(The NBA staggered the introduction of the four new teams to avoid diluting the state of play by bringing four new teams in all at once.)

Charlotte and Miami both started play with the 1988-89 season. Minnesota and Orlando joined the fray for the 1989-90 season.

When the Toronto Raptors and Vancouver Grizzlies joined the NBA, there was roughly a two-and-a-half-year gap between the start of the process and the teams starting play. The league was known to be considering expansion in late-1992. In September of 1993, they awarded Toronto a franchise. In February of 1994, Vancouver was given the second Canadian franchise. In late-June of 1995, the Raptors and Grizzlies took part in the 1995 NBA Expansion Draft. The teams then started play in the 1995-96 season.

So, let’s say the league wraps up their media rights deal as quickly as possible, and everything is set sometime in 2024. If we take Adam Silver at his word, we can expect the expansion process to start after that.

Now, let’s say the league wants to move quickly on expansion too. If we use the two-year window, that would mean the 2024-25 and 2025-26 seasons are played as normal. Then, with the start of the 2026-27 season, we’d likely have two new teams in place. If anything is delayed, those debuts could be pushed to the 2027-28 season or possibly even the 2028-29 season.

That means somewhere between the 2026-27 and 2028-29 seasons are the most likely seasons when we’ll see new teams join the NBA.

The Expansion Process

When the NBA decides it’s time to expand, they’ll start the process by allowing cities and ownership groups to bid for teams. Yes, we can all assume that Seattle and Las Vegas are probably the most likely cities to get teams. But that’s an assumption, and nothing more.

Several other cities will be in the mix. Adam Silver himself recently mentioned a return to Vancouver as being on the table. He said Montreal has reached out the NBA on being a potential expansion city. Silver also talked about Mexico City being an area that the league is partnering with, with the current G League team potentially being a precursor to an NBA team at some point.

Stateside, there are a lot of cities that have expressed interest in having their own NBA team. Louisville, Kansas City, St. Louis, Pittsburgh, Virginia Beach and San Diego have all been in the mix at various points.

So, even if Seattle and Las Vegas are the heavy favorites, the NBA isn’t going to discard the other suitors. The reasons for this are two-fold.

First, by encouraging more cities to bid for teams, the cost of each expansion team will go up considerably. As of now, the league is expected to get somewhere between $3 and $4 billion for each team. And that’s being somewhat conservative in projecting how much money comes in. Considering the expansion fees go directly to the ownership groups of the existing 30 teams, they want those figures to be as high as possible.

Because of this, expect the league to entertain bids from non-Seattle and non-Las Vegas groups. But there’s a secondary motivation to that, as well.

By taking in as many bids as possible, the NBA can find out who is really serious about adding a team. For example, if a city comes in with a bid worth “only” $2 billion, they’ll be almost immediately out of the mix. Now, let’s say four cities come in with bids approaching or surpassing the $4 billion mark, now the league has options.

Even if the primary option is to initially expand to Seattle and Las Vegas, the league would have serious suitors in other cities. And it’s clear that the NBA remains committed to expanding their global reach, likely by furthering their presence in Canada first. If there are more than just Seattle and Las Vegas on the table, the NBA can push the expansion fees higher, while also keeping a couple of cities in their back pocket.

Let’s go back to when the league added the Heat, Timberwolves, Magic and original Hornets. There is some mixed reporting on whether or not the league wanted to add four team. Some say the NBA was committed to two new cities, but found two more suitable candidates that they felt they couldn’t pass up.

Could history repeat itself? It’s certainly possible. Adding roughly $16 billion in expansion fees for four teams (and, again, that’s potentially a conservative figure) would mean each of the existing 30 teams will pocket over $500 million. And that’s money that doesn’t go to the players.

The downside? The existing 30 teams would eventually have to split the hoped-for $75 billion from the media rights deal more than planned for. But $500 million goes a long way towards offsetting any potential loss in TV revenue. Agan again, that’s money straight into the owners’ pockets.

What’s Next

We’ll touch on the actual Expansion Draft process in the next installment. When the NBA is in a bit of a dead period, it’s a popular exercise to do a mock Expansion Draft. However, a lot of these are done in a somewhat sloppy way. They seem to be hit-or-miss on following the actual Expansion Draft rules and processes.

We’re going to lay out all of the rules in our next installment of the NBA Expansion Series. The goal is to make everything as understandable as possible, as well as to provide a guide for any would-be mock Expansions Drafts. We’ll also cover how the salary cap works for these teams, and what the NBA has done as far as draft picks for expansion teams, as well.

After that, we’ll explore the history of past Expansion Drafts. We’ll look at protected lists, strategies (for both incumbent and expansion teams) and the actual draft results themselves. From there, we’ll explore what teams did with their inaugural rosters, as far as trades and signing free agents.

We’ll also look at the history of how long it’s taken an expansion team to become a good team. How long before the playoffs are a reality? How long before the team won a playoff series? And when did they become a real contender?

Then, with all of rules and history behind us, we’ll start the fun process of some mock Expansion Drafts ourselves. We’ll do protected lists and draft lists (for both two- and four-team Expansion Drafts). And we’ll continually tweak and track the progress of these lists as we build toward an inevitable actual Expansion Draft.

We’re going to have some fun with this and look forward to having you join us on the ride!

 


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