UP546 NBA Europe: It’s not about basketball

0:00Lenz Balan:Hiya, it's Richard Gillis here. Welcome to Unofficial Partner, the sports business podcast. Have you got between 500 million and a billion dollars hanging around? If so, I might have a basketball franchise to sell you. If you don't, also hold on. The next 45 minutes or so is a conversation you need to hear because I think it's about how the money markets and the American sports and entertainment industry views Europe. Our guest today is Lenz Balan, who is Chief Executive officer of the London Lions basketball team and he's right in the middle of this process. He's got an interesting background.

0:33Lenz Balan:I first met him when he was at 777 Partnership and when they acquired the London Lions and the British Basketball League. That subsequently collapsed in 2024 and the Lions briefly entered administration. The BBL was dissolved and Balland stayed on through the crisis and secured ownership via Tessanet. So what's actually happening? What sort of money is best suited to buy an NBA franchise? And what does this tell us about the sport and entertainment market in 2026 it's a fascinating conversation really honest and open and i really liked it you end up with loads of more questions than you start which is probably a good way of judging a decent podcast cue the music

1:27Lenz Balan:I'm trying to think when the last time we spoke, I think it was probably three or four years ago. I think it was the first time when we had invested in Lions. So yeah, maybe five years ago now. It was a long time ago. Yeah, yeah. And you were at 777 at that point? I was. Yeah, yeah. I was an investment professional there. And you're still in London basketball. I know. How does that work? Well, my dad thinks I'm crazy because he's like, do they even play basketball in the UK? The long story short is obviously I fell out with my old firm for a number of different reasons and really fell in love with the club.

2:10I wanted to rescue the club and went about trying to find investors to take it over and then was able to figure that out ultimately and left the firm. and they said they the test net guys took it over and they sort of said you know we're not going to do this without you sticking around would you like to stay on as president ceo of the club thought about it for a while said yes and and i've been rebuilding the club since and now you're in notting hill and now i'm in notting hill in a tiny flat but i love this place

2:39Lenz Balan:it's great so everywhere i go at the moment i people almost the first or second conversation is nba europe yeah and i think that probably says something about the rooms i'm in or the people i meet but we're at that moment where there's a lot of people saying you know what if what's going to happen what's what's the plan blah blah blah so i thought it'd be great to get you on because you're right in the middle of this and i think there's a few questions specific about the project but also what it means what do you think it represents do you know what i mean there's a sometimes these big deals are poster children for something else just a framing of what we think sport is these days and what the sport and entertainment market is so i guess there's a my question is i think ultimately what this podcast is about is what type of money do you think is best suited to running or financing an NBA Europe franchise?

3:44It's a really good question. What kind of money is suited to running and financing an NBA Europe franchise? My, you know, I would think you need long term, long dated capital. So there's going to be a lot of people who are going to be interested in the sort of core parts around this. You've had all these private equity firms that have raised money around venue growth, around the sort of resilience of IP at the league level, media rights, et cetera. So that part is going to be, I think, the sort of easy part of the cap stack to kind of fill out. The more difficult part is, can you get an investment vehicle that has a very, very long-term perspective?

4:26So my guess is family offices like our family office, Tessnet, who aren't sort of traditional private equity firms, but make long-term investments, long-term bets, potentially insurance-backed long sort of investment firms or investment vehicles, and then sovereign wealth firms. I think those are probably the three kind of groups of people that make sense from an investment standpoint on the pure club risk. And then they'll obviously partner with, there'll be lots of capital that'll be available on the infrastructure piece and the potential IP piece. I think that's kind of where it splits out.

5:00Lenz Balan:So let's start with the obvious. Let's talk about London, but we'll just use that as a proxy because I think there are two maps as far as I can see. There's the map of Europe as the money would like. That's what the league, they dream of, London, Paris, Rome, Madrid. There is also another map, which is where the fans are, proper basketball fans, and that isn't in those cities largely but they you know there's a lot as you will know very well it's southeast europe it's turkey it's croatia those are proper basketball fans you know they are just that's a sort of rivalry club rivalry in those markets that rivals european football rival you know there's an edge to it there's a it's it's proper sport and those are two maps that okay there's a bit of a vein in the middle but convince me why there is a market for the money map what is it that they're seeing they're saying okay is basketball actually central to this or is this just about real estate it's about sport and entertainment marketplaces it's a sort of different version of sport than a sports fan would recognize so i think we talked about this maybe a while back, Richard, to me, basketball, at least in this country, in a lot of ways, reminds me of football.

6:22I grew up calling soccer, whatever it was, 20, 30 years ago. So I can say in the United Kingdom, there was sort of this high watermark in the 90s that everybody sort of talks about where people were really enthusiastic about it. But there wasn't like the right sort of economic moat behind it. In other words, you had clubs that never really owned or controlled their facilities, which meant that there wasn't the same kind of backing that you might have gotten in these other countries that largely got facilities from governments, long-term leases from governments that made their venues work. A good example is our sister club, Zalgris.

6:56They were able to build their 20 ,000-seater arena. That 20 ,000-seater arena that they successfully built became the economic backbone to building a very successful and a profitable club and one that's doing quite well in the actual competition. So I think historically, that sort of divergence in the 90s was kind of a big chunk of what happened historically. And I also sort of think, but what is left, and going back to the point about America, is you still have a massive cultural influence in the UK that speaks well to sort of basketball and basketball audiences. Basketball benefits from being a very low barrier to entry sport in every way you can imagine.

7:35It works really well for the way in which we consume content. You don't have to really understand to grow up in it to appreciate the athleticism and the plays. It has these connections to fashion, culture, art, all of those positive things. And you've got basically a, despite all of the really, really difficult, and it's really interesting to hear the stories of some of the British players on our team, whether it's Dean Williams or Mo Salawade, Ovi Soko, other players, what they had to do to become professional basketball players because of all the barriers that exist, primarily because there were no sort of sustainable clubs that had the infrastructure needed for it to be consistent.

8:16That reminds me of soccer in the US 20 years ago. Big participation base, lots of people who want to play. And so I think it's more about untapping those sort of markets more than anything else. I think people look at it and they say there's potential, but it's a customer acquisition strategy, really. And that customer acquisition strategy is buoyed by the sort of underlying fundamentals about the interest in the sport and about its accessibility to basically anybody. It's very hard for me to get a British person to be excited about baseball. I grew up in Boston. I love baseball. I love my Red Sox.

8:50It's very difficult. I went to a cricket game. It was fun. I was sitting next to a famous cricketer. I had no idea who he was, but he was really sweet to me. And he explained to me the game and all of that. But it was really difficult for me to process and understand how incredible the athletes are. Basketball doesn't have that. And I think in the UK in particular, what we try to do with the Lions is try to infuse it with a really entertaining night out. And then over time, and I think it is for folks, for lots of folks, and then over time, you start to build fandom from there. But it is a customer acquisition sort of strategy.

9:24And I think the potential is massive. It's just about having the right operators who kind of understand and view this as a, as almost like a venture kind of startup in a way to acquire customers. And you can do it through compelling content. And that compelling content is candidly easy for people to digest.

9:42Lenz Balan:That might be the difference between sport and entertainment, that line, isn't it? You know, when you're sitting next to the cricket guy or I'm sitting next to a baseball guy, I sort of, I'm there as a tourist and you're there as a fan, you know, a proper fan. And I think that I don't care. I go to a lot of events where I actually fundamentally don't care. I'm there because it's a nice day out. And it's, you know, I'm a big eventer, which is the term that sort of grew, I think, around the London 2012 Olympics. That suddenly became the framing of who the audience, the target audience was. and I care about relatively few things as a sports fan you know I've got a football club it might be about it actually there's a few other sort of bits and bobs that I sort of take an interest in and I'm serviced with all the all of the media but I don't it's going to be hard to sort of move me from someone who might turn up every now and then and watch a basketball match in London to someone who is a fan.

10:43Lenz Balan:I'm wondering if that actually matters, that. Well, I think the first step toward being a fan is experience it as an entertainment. And again, I think the ability, basketball is an incredibly complex strategic game, but I think the nice part, I think it's just as strategic and complex as football or rugby or cricket or any other sport, right, at a high level, if done sort of properly. But the nice thing about basketball is you can still process and enjoy it without understanding that fits. And so the first part is hook people in, right? So you hook people in with the entertainment and it's not that hard to do it because of the nature of the sport.

11:25It's fast paced. Athletic movements usually result in some sort of really exciting play. And then all of the entertainment around it keeps your engagement during timeouts and other sort of periods. So I think it's always about first entertain you. That was, you know what? That was a good bit of fun. I really enjoyed it. I kind of understand a little bit about it now. And then you go to game two and game three and all of a sudden you're a fan. It happened with me with football here in the UK. A friend of mine took me to a Fulham game and sort of, wow, that was cool that I enjoyed that. And yet you became a football fan.

12:00And now I watch football. And I think that that is the opportunity. I also think that there's a large segment of the population where they do look at sport as entertainment. If I think about my mother, for example, she loved Michael Jordan and the Bulls, probably because she thought Michael was attractive. But that led her into actually becoming a basketball and a sports fan in a way. So I do think basketball sort of lends itself in a very unique way. I think maybe football is the only sport that's similar to that where you can, because of the low barrier to sort of entry and understand converting people into fandom, I don't think is as difficult.

12:41The question is whether or not there's enough sort of clubs with the right kind of ownership groups and interest level to spend the money on the marketing that you need to sort of capture that fan base and take them down that, capture that audience base and take them down that sort of funnel. And I think there is because of the basic playing base and because of some of the things we talked about earlier.

13:06Lenz Balan:So the football IP in this conversation is interesting. So again, and put me right on this, you know, please, if I've got the numbers wrong. So a franchise, if I want to buy a franchise, an NBA franchise in a major European capital, it's going to be about 500 million to 750 million. Is that about right? Yeah, 500 million to a billion is what they're saying for NBA Europe. Yeah. Okay. And a shortcut to the fan question is going via football IP. So the fandom that's been built over a century by Real Madrid or by, you know, more recently by PSG in Paris. that is a way of potentially i could see a sort of a powerpoint deck which gathers together football fans merges them into psgs or real madrid's basketball potential audience i can start to see that as a as a thing and okay that's an argument i'll either agree with or not or not or buy or not.

14:12Lenz Balan:But that's the shortcut, as I understand it. And the question I've got is actually, from the club's perspective, what role are they playing? So I'm assuming they're not going to be coughing money for the right to access their own audience. So just walk me through how that works in those cities. Well, I think most people who are buying into sort of NBA Europe or trying to build a EuroLeague franchise or trying to build a top franchise are, have an investment thesis that they're saying the market is underserved by this sport and we believe that we can capture and grow that audience by this sport.

14:47The football question is a really interesting one to me. I'm not 100 % convinced, at least in the UK market, that the football question answers it. I could be wrong about it. I think one of the things that you learn living here is how tribal and how prideful football fans are. I don't see an Arsenal basketball. You could pick the wrong club, couldn't you? You could pick the wrong club. You can immediately alienate sort of other potential fan bases. So I think there is a potential, there's trickiness there. The other question I have is whether or not those audience overlap in a meaningful way. So there'll be some portion of people that will be really, really just interested in sport.

15:28People like myself, I just love sport. So I'll go to anything. And yeah, I loved going to the cricket match, even though I didn't understand what was happening. And I think you'll get some of that. I'm not sure if that audience necessarily, I would say in this market is necessarily, there's enough of an overlap. So I do think that you'll pull from some of that audience, but really growing basketball is about pulling from the large participation base that already exists and getting them to be a part of a club infrastructure and then pulling from the sort of new audiences that are interested in it initially for the entertainment aspect and for the ability for them to process and enjoy the game relatively quickly.

16:07So I'm not convinced that in every single market, it works the exact same way in terms of being able to leverage that. Where I do think that there's possible synergies there is you might have a large sort of commercial operating ecosystem that you can lean on that can help you sort of build out and grow that audience. And there are some things that are shared. I can say from a London Lions perspective, being basketball focused is really important because trying to build basketball in a country that has a large participation base, but doesn't have a sort of history of like really building it is very difficult.

16:43The barriers are everywhere that you can imagine in places that people probably will be surprised by if they sort of landed here tomorrow and try to figure out how to do it. So I do think that there are also advantages of being a basketball, sort of organic basketball club, trying to build an organic basketball fan base. And I think that argument is just as compelling as trying to borrow the football audience, which may work. I'm not saying it doesn't, but I do think that there are things that people aren't necessarily factoring in from that perspective. The other thing that's really important that I've learned as an American living abroad and spending time in Europe is the UK is different from a lot of European countries.

17:24And so that may work in countries where historically it may work better in countries where sort of historically, you know, it's been a club infrastructure. So in Spain and some of these other countries, you join Real Madrid as a club and you play all kinds of sports and you're a part of the Real Madrid club. Here in the UK, the ecosystem hasn't really developed that way. There is a history of football clubs that have owned basketball clubs. But, you know, it seems to me that the sports are quite separate. You don't join, you know, you don't join Chelsea to play a bunch of sports. You join Chelsea to play football and that's it.

18:02You join your cricket club to play your cricket club and that's it.

18:05Lenz Balan:Rugby club to play your rugby club and that's it. And so I do think that there are ways in which that may be easier in, say, Paris, where things are a little bit more, you know, a little bit more club based across for Spain than it may be in the UK. So there are really important distinctions and differences depending on the economy. And how many franchises will London or the UK sustain, do you think? I mean, do you think it will be one in London and one in Manchester? Or do you think there's, you've said that it could take two in London, But what's your running theory? So, you know, the good news is I think the SLB, which is the domestically that the London Lions are playing in, had benefited from some enormous tailwinds.

18:53I think the interest from FIBA, the interest from EuroLeague, the interest from NBA are all positive tailwinds in general. But probably the most important tailwinds is an influx of, you know, sort of owners with the sort of capital and the context to do this and with the ambition to sort of build big clubs. So you've got Manchester, Sheffield, Bristol, you know, you've got the majority of clubs are now investor backed. Bristol is trying to build a large arena in Bristol. You've got Manchester trying to play in the sort of Champions League. So there's a lot of really positive things that are happening.

19:24From my perspective, it is really, really important for us to grow the domestic league and domestic audience. And we do that by continuing to have investor backed folks like Sheffield and Manchester and others coming into markets that I think are really, really exciting markets for basketball within the UK. And that quality and that level really, really has to be at a high level if they are to compete with a prospective NBA franchise. And our league needs to be able to digest clubs easily that want to play at the EuroLeague or NBA Europe or Champions League level. However, all of that sort of works out.

19:58So I think that's really important. So my goal, my hope is that we can expand our franchises off the back of all of that tailwind. And I think it's a really interesting opportunity for investors who may not want to pay a massive investment for a Manchester or London franchise, but want to benefit from those tailwinds. I would be looking to put a club in Brighton and Birmingham and all these other places if I was an investor, because that's a secondary way of sort of capturing that value. So I think that part is really important. In terms of London itself, I mean, London has seven Premier League football clubs.

20:30Might be six soon, but it looks like it's got seven Premier League football clubs. So I do think that there's room in London for multiple top-level teams. I think it's really important for London in particular to have all of their clubs aiming to play a top-level European competition in order for it all to be viable. And I think that marketplace is so large. it's not a demand problem it's a supply problem and you know i would i think that having several large clubs in a city like london would be beneficial to the euro league nba europe project more more broadly and also would be would be helpful to the clubs that actually exist now i have no control over what happens who ends up being in nba europe if they come over and acquire us if they start separately.

21:18What I do have control over is I've got a great investment group. I've got really smart people trying to crack the market. We have a pretty good understanding of and have a lot of learnings from things that worked and things that haven't worked. And as Alliance, we have global ambition. We want to be a top team in Europe. We want to be a globally recognized brand. We don't see why we couldn't be that. And no matter what happens, The ambition is to make sure that the Lions reach that goal. And we want to build a massive community of kids who I think are massively underserved because basketball has been underfunded and poorly funded historically.

21:55And so I think actually having multiple clubs in London could be a really positive thing.

22:00Lenz Balan:So the London market, there's the fan question, but there's also the corporate marketplace, which again London quite often people say London when it when you look at it as a sort of sport and entertainment marketplace it's a little bit like LA in that there's a you know it's it's packed with venues it's got a thriving it's a you know a major metropolis but the entertainment marketplace and the corporate sponsorship marketplace is very mature so if I'm an investor looking at coming in and building something in London or creating something in London that's a huge plus point yeah and i'm wondering how much the basketball thing matters i keep wondering whether actually if i want to build a venue based i want to use basketball to get the mayor to cough for a venue i'm gonna then come in and say right okay this is a nba franchise but actually it's running day in day out an entertainment business which could be you know anything so from Abba Voyage to concerts to whatever it is, which is just part of daily London life.

23:11Lenz Balan:And I can see the commercial appeal of that. And I'm just wondering how much basketball matters. Basket was just the context for just a different play. And we've seen in the money going into Atletico Madrid, you're seeing it. It's sort of football is part of the conversation, but it's just a sort of thing to keep the pot boiling. Actually, it's a real estate play. I think you might have stolen one of my investment memorandums or our strategy. Yeah, I think you're right. I think real estate is a really important piece of it. And that any asset that you have as a responsible business, you're going to try to sweat that asset and get the most out of it.

23:53And you have the benefit of it being London. London, I think, has an insatiable appetite for live events. and I'm not sure if we have enough indoor spaces to capture the potential of the London market, just for a million different reasons, because of its size, because of its overall influence in the market, because of the diversity of its population, you know, expats from all over the place. So there's a lot of really, really compelling reasons West winning that asset makes sense.

24:20Lenz Balan:However, does it have to be a new venue? I mean, you've got the O2, you've got the co-op sort of live venue. What is it? Does it need to be a brand new venue? I don't know if it necessarily needs to be a brand new venue. What I do think sort of needs to happen is that club is going to need to have control over that venue in order to make the economics stack up. I think that's a really important part of it. So the money, the investors will want to own the house. They don't want to rent. Yeah, yeah. I think that's a massive, massive important part, at least from our perspective, is that's really important.

24:55What I would say is, however, is sport has a way and, you know, I'm always imagining I'm a bit of an optimist, but I think we imagine, you know, the potential of basketball being bigger and bigger and bigger over time. And based on sort of where the sort of powerful leagues of EuroLeague, NBA, EuroFiva, based on their sort of interest, I think that will only accelerate it. And over time, the differentiator is that sporting asset. It does give you that cultural connection with the community in a way that like just a venue that is primarily that is only used for sort of for music and entertainment doesn't.

25:36It gives you a really powerful anchor tenant over time as you sort of acquire those customers and make them into fans. And it is a differentiated sort of selling point from a socio economic impact thing. The one thing about sort of the London Lions and basketball that I really love that is sort of differentiated is, you know, we are our success is a function of the impact that we make on the community. So if we can build positive community connections, get people belonging, create a platform where the best there's so many amazing basketball potential basketball players. There's so many kids that I see in London.