- Brooklyn Nets forward has acquired five-per-cent stake in MLS team, worth around $16m
- Union hopes deal will make team more relevant, increase fanbase and improve commercial fortunes
- Durant will take an active ownership role as he looks to expand his Thirty Five Ventures operations
Kevin Durant’s acquisition of a minority stake in the Philadelphia Union represents the Brooklyn Nets forward and National Basketball Association superstar’s latest, and arguably most significant, move in his ever-expanding sports business enterprise.
In June, it was announced that the two-time NBA champion and former Most Valuable Player acquired a five-per-cent stake in the Major League Soccer team, with an option to purchase a further five per cent.
Terms were not disclosed but it was revealed that the investment valued the Union at more than the $325m fee paid last December by the MLS Charlotte expansion team, which makes Durant’s stake worth a minimum of $16.25m.
Durant is the latest current or former NBA player to become a MLS investor, joining Steve Nash (Vancouver Whitecaps), Magic Johnson (LAFC) and James Harden (Houston Dynamo). Meanwhile, Los Angeles Lakers superstar LeBron James has a two-per-cent stake in Premier League champions Liverpool FC.
Through Durant’s company Thirty Five Ventures, which he co-founded with his business manager Rich Kleiman in 2017, the 31-year-old has become an increasingly significant figure in the United States sports business industry.
The New York-based Thirty Five Ventures has a diverse investment portfolio, including in companies such as delivery service Postmates, financial technology firm Acorns, sports media outlet Overtime, and digital currency exchange Coinbase. Durant’s portfolio also comprises a media and creative development arm, including sports business content platform The Boardroom, which is continuing despite the recent ending of a broadcast partnership with ESPN+; and a philanthropic wing with the Kevin Durant Charity Foundation.
Durant has serious intentions of purchasing an NBA team after his playing career ends. As such, the move to become an investor in one of the five major men’s leagues in the US could potentially become a stepping stone toward this goal as he gains valuable knowledge, insight, and experience of being a team owner.
With the value of MLS teams rising exponentially in recent years – and American interest in soccer generally poised to significantly spike after the 2026 World Cup, which is being co-hosted in the United States, Canada, and Mexico – it is also potentially a sound business investment in itself.
The Union, for its part, is looking to tap into Durant’s championship experience, having won two NBA titles with the Golden State Warriors, two NBA Finals Most Valuable Player awards, a league MVP honor, and numerous other basketball awards and achievements.
More specifically, the team is looking to actively capitalize on Durant’s extensive reach and popularity to strengthen ties with the suburban Philadelphia community of Chester, Pennsylvania, where the team is based, and become more relevant locally, nationally and internationally.
In turn, the team is hoping that the association with Durant, who has more than 18m followers on Twitter, will lead to an increased and more diverse fanbase, a deeper engagement with supporters, and improved commercial fortunes.
Durant and the Thirty Five Ventures team are not intending to be silent partners. Rather, they will play an active role in helping shape and transform the Union’s business strategy, a process that has started in earnest over the past month.
In short, it is a mutually-beneficial partnership that both parties stand to benefit from in numerous ways.
“When I saw soccer broadcasters speaking about [this partnership], they were focusing on how this was a very shrewd move by Kevin. That this team fit and needed Kevin,” Kleiman tells SportBusiness. “And because of that people have been more inclined to talk about it and you’ve seen a really good response to it. Kevin can be met with negative criticism sometimes, just because. But in this case I saw nothing but positive and it’s because of how much it made sense to people.”
DC United’s loss is Philadelphia Union’s gain
The deal between Durant and the Union originated in October 2019 when the team’s majority owner Jay Sugarman was shown an article in The Athletic, which disclosed conversations between the player and MLS team DC United over a potential investment that had fallen through.
According to Kleiman, Durant’s interest in MLS stems from his general interest in soccer and the fact that at this stage of his business career, investing in MLS provides a more approachable point of entry than acquiring a stake in, for example, the National Football League or Major League Baseball, whose teams are significantly higher in value.
A partnership with DC United appeared to be an ideal fit as Durant was raised in Prince George’s County, Maryland, in the immediate suburbs of Washington, District of Columbia. Kleiman says talks fell through because the team was essentially looking for a silent partner and this was of no interest to Durant and Thirty Five Ventures, who were looking to be active partners.
“Someone from DC United reached out and we had some preliminary conversations and met with the ownership group and it made all the sense in the world being that it’s in Kevin’s backyard but it really felt like it was going to be an investment,” Kleiman recalls. “Very similar to the other deals we do in our venture portfolio, we’re not going to invest in something just because it’s a good investment. If we’re going to do this in the world of sports and in ownership, it was going to be something where we were needed, where we would have a voice, where we could help in the community and share some of the same skills and things that we’ve learned.”
Notably, The Athletic article added that Durant remained “interested in investment opportunities within Major League Soccer and may look at buying into another team in the future.”
Spotting a golden opportunity, Sugarman reached out to DC United co-owner Steve Kaplan out of courtesy to check he was OK with the Union speaking to Durant about a potential investment. Union minority owner Richard Leibovitch then contacted Kleiman, whom he knew well, to gauge the extent of the player’s general interest in MLS and a meeting was quickly set up.
— Kevin Durant (@KDTrey5) June 15, 2020
“We realized that [Durant] was interested…and wasn’t just interested in making an investment, he was looking for a way to bring his championship mentality as a player, his community involvement and philanthropic activities, and the business side with Thirty Five Ventures. When you look at those three things, that fits very nicely with where we’re going,” Sugarman tells SportBusiness.
“That led to a meeting and we spent a couple of hours talking about life and what he was looking to do and what we were trying to achieve and things that were important to him and to us. I have had lots of meetings with investors over the years and you can tell pretty quickly when things are lining up and this one felt like it lined up pretty quickly.”
Kleiman was impressed by the Union’s desire to utilize the expertise and input of the Thirty Five Ventures team. “When I first spoke to the Union I could tell in the first conversation that they had a real desire to find a partner that could be beneficial for the team…They really wanted someone who could make an impact,” he said.
After several introductory meetings, Durant and Kleiman visited the Union facilities in Chester in December as talks progressed. The onset of the global Covid-19 pandemic in early 2020 briefly held up proceedings but a deal was eventually announced in June.
Durant joins an investment group led by real estate entrepreneur Sugarman and includes minority owners Richie Graham and his family, and real estate investor Leibovitch, among others.
“Five per cent going to 10 per cent is actually a pretty big stake,” says Sugarman of Durant’s investment. “If you count all the number of people who own that kind of sized position in MLS, it’s relatively small number. I think he views it as a meaningful stake.”
Geographical factors helped seal deal
Geographical factors played a small but significant role in the partnership, with Durant and Kleiman being able to easily commute from New York to Philadelphia in the coming years to watch the Union play and meet team executives. It was part of the selling point of the Union to Durant.
The New York-based Sugarman says: “We said, ‘Look, we’re building something really special in Philadelphia that might be a good fit, if he’s interested in MLS, given his presence in Washington, DC, and his new presence in New York, Philadelphia would kind of complete the Eastern Seaboard for him.’ There were a lot of pieces of the puzzle that made sense.”
According to Kleiman, it was more important for Durant to partner with the right team and owners regardless of where the franchise was located. But he says investing in a team in the Midwest or on the West Coast, for example, would not have been “less likely but it wouldn’t have made as much sense.”
He added: “If we had connected with Jay and Richard [Leibovitch] and they had owned a team in Atlanta, Seattle or Kansas City and it was the right deal, [we] would have done the right deal. However, the idea that this was in between New York and DC and there are a lot of parallels with the community of Chester and where he was from in Prince George’s County, it added a lot to it.”
Kleiman says Durant has not had direct conversations with Harden and James about their respective investments in the Houston Dynamo and Liverpool FC. But he adds that elite athletes such as Durant often take inspiration from each other as they continue to become more active in the business community.
“In general, the landscape of sports business and the enterprises that these athletes are building, whether it’s spoken about or just unsaid and seen through social media and media in general, they are all inspiring one another,” Kleiman says. “I think everyone looks at the moves that their peers are making, whether it’s media deals, investments, sneaker deals, sports ownership…and it keeps your operation and enterprise moving.
“For us, it wasn’t just looked at and thought we should do that same move. But we knew it was possible. I know speaking with [James’ business partner] Maverick [Carter] how exciting their relationship with Liverpool is and the different things they can do with Nike. So in that way, we saw we had the same skill sets being able to offer that to an organization. So if anything it’s been more influence but no real conversation,” he says.
Long-term business strategy
Both parties are actively seeking ways to maximize the partnership, with daily conversations taking place between the Union front office and the Thirty Five Ventures team.
Durant has already taken part in an online charity gala to raise money for the Philadelphia Union Foundation, which included signed Union merchandise.
It is clear that the Union, which signed a new stadium naming-rights deal with Subaru of America earlier this year, believes that Durant’s arrival can take the team to a whole new relevance locally in Philadelphia and throughout the US.
“Philadelphia is a great sports market, but it also means there are four very well-established teams in the market. So we really have to be scrappier, a little more clever, and work a little harder,” Sugarman says. “But we now tell people there are five major sports teams in Philadelphia and we’re going to live up to that branding. I think Kevin joining us is a big part of that.
“I know our fans are lot more interested in what he has to say than what I have to say. He’s definitely been able to pick up some interest in fans in a way that is really unique. [The investment] can’t help but continue to raise our profile in the global soccer community. In this world, the worst thing is not being talked about and we think he raises the profile of the team – whether it’s a sponsor or whether it’s a potential player…people will have heard of Philadelphia and people will have heard of Kevin Durant and it gives us another contact point to emphasize that this team is very ambitious,” he says.
.@KDTrey5 decided to toss in a few new auction items to help in our COVID relief efforts 👀 👀
👉 Signed Union Jersey
👉 Signed Basketball or Soccer Ball
👉 Signed @brooklynnets Jersey
— PhilaUnion (@PhilaUnion) July 1, 2020
The Thirty Five Ventures team is already planning ways to make an impact from a business and community-led standpoint.
“When you think of MLS teams as a layman, there’s always a few teams that the fan would mention and to be able to get the Union in the same conversation…there are little things that you need to do on social media with your content, with how you align different assets of ours with the Union, when we show up to games, when we come up with limited product for fans, how we communicate with fans,” Kleiman says. “All those little things done over a long period of time can build some real brand value.”
Going forward, it is hoped that Durant’s investment in the Union will help him on his journey to become an NBA team owner one day.
“It’s not consciously a stepping stone [to become an NBA team owner] because there’s a chance he may never have the opportunity or he may end up becoming a fanatic of ownership in MLS and keep his focus there post-career,” Kleiman says. “But what it will do is give him experience and more to learn from and grow from and understand the dynamic from the owners’ box.
“If anything, it will give him the information when he goes into that next chapter. My hope is that this does end up becoming a stepping stone and that he can become a player in both [MLS and the NBA],” he says.