There was shock news last Friday when the British Basketball Federation (BBF) announced they were terminating the British Basketball League (BBL) operating license with owner company Basketball League Ltd (BLL) with immediate effect citing serious financial concerns about its ability to run the league.
There has been a lot of questions and confusion about what it actually means, so following a media call with BBF Chair Chris Grant, and through our own sources we’ve tried to break it all down with some questions and answers below.
In a short statement released to the media on Friday June 14, the BBF cited serious financial concerns indicating the company who owns the license, BLL, being no longer able to carry out its duty as the operator of the league, pointing to the BLL entering into creditor arrangements with two of its largest creditors.
Since Miami-based private equity firm 777 Partners – who are swirling in controversy after their businesses were investigated following their attempted takeover of Everton football club – took a 45% stake in the league for £7 million in 2021, there has been multiple reports of late payments to the league as part of their investment, including a reported £900,000 sum in the summer of 2023 putting the league at risk of insolvency, along with the Play-Off Finals reportedly being in danger of not going ahead at all on 19 May because of a missed a deadline for the payment.
777, whose total stake in the league sits at 50% with their ownership of the Lions, have come under increased scrutiny in recent months, following alleged unscrupulous business practices reported by Josimar, before London asset manager Leadenhall Capital filed a lawsuit that alleged that 777 co-founders Josh Wander and Steven Pasko were “operating a giant shell game at best, and an outright Ponzi scheme at worst”.
Journalist Paul Brown – who has been at the forefront of Josimar’s investigative pieces into 777 – reported a new motion was filed at the Delaware Court of Chancery in early June, accusing Wander and Pasko of “operating a massive, Madoff-scale scheme of fraud to the tune of many 100s of millions of dollars” and that “it has become clear that the scheme is falling apart.”
As a result of the financial situation BLL finds itself in, the federation – whose only two real tangible jobs are to put national teams on the floor each year and oversee the license for the professional league – announced they were terminating the license agreement with immediate effect.`
“There was some specific issues around finances and creditors, which we became aware of and followed up on,” BBF Chair Chris Grant said in the media briefing on Thursday June 20.
“And at a certain point it crossed the line into areas which, in our view and with our advice, clearly were in breach of some pretty important aspects of the license.
“By the time we got to that crossing of the line, which was very close to when we put the announcement out last week, we were very mindful as a federation that there were only a few weeks to go until the new season is due to tip off and that what we had learned about the finances of Basketball League Limited was that there was a very, very serious set of question marks around their capacity to operate the league next season.
“So at that point, we felt it was our responsibility to act decisively in order to be able to do our very best to put in place a workable solution for next season. Any delay at that point would have just compressed and reduced the opportunity to have some continuity for men’s professional basketball.”
It is not 100% clear who the creditors are, but both HMRC and a company involved with the league’s in-house production – which CEO Aaron Radin told media at the start of the seasons costs millions – have been mentioned as potentials to Hoopsfix.
The BBF and BLL were seven years into a 10 year agreement for the license that was reached in 2017.
The license was due for a comprehensive review later this this year in line with the terms of agreement, however, if it was done later and the BLL was found to have been in breach of the terms, it would have increased the likelihood of causing missed games/disrupting the season.
The BBF’s rationale – in part – is to get this done now, with 13 weeks until the start of the season to increase the chance of a positive outcome and save the coming season.
It is the BBF’s duty, as the governing body, to safeguard the sport and as a result of that, execute on a license with a licensee that acts in the best interests of the game.
Ironically, the BBF has a track record of shying away from any actual governance of the sport, and so it was a bold play as the first major move they have made since being responsible for the license of the league.
Under FIBA regulations, each FIBA member body can only have one single, endorsed, professional competition.
By granting the license to be the professional league to an entity, it means they are officially sanctioned by the domestic governing body, and in turn the global governing body, FIBA, so can license players, referees, enter FIBA endorsed European competitions*, and are recognised by both the domestic and world governing body.
For example, for a club operating in a league without the license it would be impossible to bring an American import into the country on a work visa as it would require endorsement from the federation with the home office, likewise if players chose to play in a non-licensed league they wouldn’t be able to be cleared to play in foreign leagues afterwards because the BBF wouldn’t clear them; which FIBA requires.
It is near impossible to run a professional league and be taken seriously without the license.
*The Caledonia Gladiators have been accepted into the BCL Qualification Rounds as a result of endorsement from the BBF despite not being a club currently in a licensed league.
The company still exists, and in theory could continue to operate a league, providing its shareholders – the clubs and 777 partners – wanted to, and it doesn’t go into administration due to the money owed.
However, not being the official designated licensee by the BBF would cause all sorts of other issues as alluded to above.
It would appear to only be an option if you were running an insular league with no imports, and/or coaches, officials and players who wanted to play/work elsewhere afterwards.
If the BBF then awarded the license to another company you’d be in a situation of having two leagues attempting to be the top flight, where you could be at risk of FIBA stepping in, like they have done previously in Japan (see below).
Absolutely nothing.
Hoopsfix has reached out the league’s press office twice over the past week for comment and not had a response, while they have put out no statements on their channels.
Hoopsfix understands the board (many of whom have since resigned) were unable to come to an agreement on a unified position to communicate and that led to a stalemate.
Chris Grant did confirm to media they have had a response from BLL, but said it was not the BBF’s place to disclose what that response has been and that needs to come from them directly.
777 Partners have also been contacted directly for comment by Hoopsfix but have yet to respond.
Again, absolutely nothing, but with the litigious nature of the situation, it is hard for anyone to speak on record.
His last public communication was a couple of weeks ago regarding the BBL’s use of AI in their content production.
It is understood Radin has long-soured on 777, and has now found himself the CEO of a company with a board believed to be absent of quorum – referring to the minimum number of present members to be able to conduct business.
It would not be a surprise to see him resign from BLL, and whether he moves forward with a new entity that could be set up by the clubs remains unclear and largely dependent on any investors brought to the table.
Hoopsfix has learned that multiple clubs are expressing concerns about the CEO’s compensation package, allegedly one of the higher ones in British sport, and his aggressive spending to elevate the league’s profile.
Multiple people close to the situation have said to Hoopsfix that, in addition to Radin, there are a number of what should be considered overpaid staff members in the league office when you take into account where the company is at as a business.
However, the league’s payroll would have likely been in Radin’s original business plan, signed off by the shareholders.
There is speculation that a new league could proceed without Radin as CEO, and it remains to be seen how many league employees – the number of which stood at 27 at the start of the season, and are contracted by BLL – move over to any new entity, should it be set up.
The clubs (minus Manchester and Plymouth, who are owned by the league) – all shareholders of BLL, making it legally sensitive – released a joint statement on the Friday evening, effectively in support of the decision.
There were varying versions of the statement, with Caledonia, Bristol and London removing different parts, mainly around accepting the decision in good faith.
Additionally, the two club representatives on the BLL board of directors, Gladiators owner Steve Timoney and Bristol Flyers’ CEO Lisa Knights have both resigned (along with three independent directors).
Timoney said in a statement regarding his resignation:
“There is no more I can do to ensure compliance with my duties as a director, acting in the interest of our creditors and representing our clubs.
“My immediate resignation allows me to now properly engage with my fellow clubs in order to support professional basketball and our businesses.”
Hoopsfix also understands the clubs were blindsided by the public announcement by the BBF of the termination of the license, leading to some friction with the federation as they were left scrambling to reassure sponsors, as well as agents and players for signings for next season.
“We will consult various stakeholders (about awarding the new license), the main ones ultimately being the current clubs,” Chris Grant responded when who would be involved with negotiating the new license.
“But as I said at the beginning, we’re very mindful as a federation of the sensitivities around the fact that they are all shareholders in the business that we’ve just removed the license from.
“They’re all independent businesses, they make their own decisions and if they don’t like what the arrangement’s gonna be – this is why I was heartened by the statements they put out, and I know there were some differences between them, but I think there are reasons for that – if they don’t like the arrangement that we come up with (for the license), then we haven’t got a league, have we?
“If the clubs don’t want to compete on those terms (of the license), then we have got a very, very difficult situation.”
The uncertainty around what is going to happen undoubtedly puts the clubs on edge, but with the clubs appearing to be loosely in support of the BBF decision to revoke the license, and with the BBF stating they will be consulting with the clubs, it would indicate the likely solution will be a new entity to take on the license, involving the clubs, without 777 Partners involved.
Yes they could.
“They certainly can,” Grant said. “And I don’t know if they want to. I mean anything like this can be appealed; obviously we took our advice in making our decision, they will have taken or be taking their advice and can make their decision.”
A source told Hoopsfix that the main question is whether or not 777 Partners (as 50% shareholders of BLL) are going to fight the decision, and if so, how they are going to do it.
Legal action is not only expensive, but time consuming, and if they do decide to take that path, it could put the start of the season at risk.
This is where it gets even more complicated, and it remains unclear.
The Lions, Giants and Patriots are all reliant on 777 money (whether that’s via the league or 777 directly) to function.
If 777 are not involved with the new entity that ends up with the license, unless new investment is found and/or the franchises are sold, there is a chance they no longer exist.
The intention would appear to be that new investors in the league and/or the franchises, continue the funding of at least Manchester – who still have at least one interested party in buying them.
Plymouth remains a question mark, in large part owing to their lack of a suitable venue and a willing owner to take them on.
Sources close to the situation say the clubs have made it clear that they do not want 777 Partners involved in the league in any capacity, whether as shareholders of the competition or owners of a franchise, which leaves major question marks around the London Lions.
American insurance group A-CAP – the main funder of 777 Partners – have reportedly instructed US investment bank Moelis to sell the Lions, so it seems the club could end up with new owners, if they can find them.
Lions allegedly have had offers to be bought since 777 became owners, but 777 were said to be seeking a larger amount more than what has been offered.
For a club that is supposedly debt-ridden and was rejected from the EuroCup over concerns around their financial viability, along with facing a winding up petition from one of its creditors, it appears they were being ambitious, and in turn, the club now faces an uncertain future.
Multiple people – both on and off record – have said there are other investors ready to go, with “significant backers” interested in both replacing what 777 Partners’ share was in the league, along with investing in individual franchises.
Last month the former BBL Chair Sir Rodney Walker told the Times the league is engaging with new investors.
Hoopsfix understands there has been investors interested in different franchises – including the Manchester Giants, which appeared to be a done deal at one point – but have been scared off by the controversy surrounding 777 Partners.
That said, Hoopsfix also understands at least two existing franchises have secured major investment, which is expected to be announced once the licensing situation is resolved.
It appears as though Radin’s statement in April that he is not worried about the fundability of the league, has proven to be true, providing 777 Partners are no longer involved.
“You know as much as me, I suspect about specific potential investors,” Grant said.
“I’m told that there are investors out there, both for the league and for clubs. Our role, we will come up with the heads of terms of what we want the license to be.
“We will have a proper process where it’s put out there and people will come to us. We’ll talk with them. We’ll look at the deals. We’ll conduct due diligence. And I think that’s the most important thing; we’ll conduct due diligence, proper due diligence on any new investors, before the license is awarded.
“But but there will be a process and that process will be as far as is appropriate, transparent.”
BLL currently owns the intellectual property (IP) of the British Basketball League, including the name.
If BLL goes into administration, one would assume the new entity that wins the license will buy it from the administrator, giving a level of continuity.
If BLL somehow does not go into administration, and the company does not want to sell the IP, Hoopsfix understands the clubs are willing to rebrand the league and move forward without the name British Basketball League.
They have members on the board of the BBF and that is the extent of their involvement, with no official statements or comments from them individually.
The BBF board voted unanimously (with one member absent) to terminate the license, which would indicate there is support across all of the home countries.
Since 2016, the BBF has been the official member body of FIBA (as opposed to the home countries), granting them the power to award the professional league license, as well as represent the country in FIBA competitions and to FIBA directly.
Unlikely, but possible.
There is an opportunity to reset what the terms for professional basketball in this country looks like, whether that be allowing promotion and relegation (hard to see that happening under the franchise based model the league has operated with since it began) or by changing other operating standards.
There were two things Chris Grant pointed to that he would like to see included more prominently under the terms of any new license agreed; 1) community programs through the lens of social impact and 2) pathway and player development.
It is believed the initial interim license (more on that below) will likely have similar terms to the current license in an effort to not complicate getting the season underway, with any major changes being implemented in the longer term agreement.
Hoopsfix has not seen the license and the BBF say it is a confidential document.
However, when the license was agreed in 2017, some things that were included in it and discussed publicly included minimum salary levels for players, clubs having to invest at least £75,000 into their player pathway; having four junior teams, as well as a partnership with a local university and academy, teams needing to be long-term anchor tenants at their chosen venue and playing on clean wooden floors, and enhanced player welfare.
It would appear as though BLL have been in breach of a number of those standards anyway.
It does beg the question why the BBF have not acted on breaches of the license earlier.
“What I would also acknowledge is that there were things written into that license which were the responsibilities of the Federation, which we haven’t carried out fully,” Grant responded. “And there were good mitigations and reasons for that, around capacity.”
FIBA are not allowed to comment as the league is not a direct part of the FIBA ecosystem, with a representative saying the only formal comments can come from the BBF.
“Their (FIBA’s) job, globally, is to safeguard the game,” Chris Grant said of FIBA’s awareness of the move.
“So it would have been weird if I hadn’t at least asked for some advice, generally, about what represents a good relationship between a federation and a licensee, and what the different models might be of that.
“The answer is, yeah, we’ve been in touch with FIBA and what has happened, I mean they haven’t been actively involved and we haven’t asked them to be, it’s not for them to be, but they wouldn’t have been surprised by what happened last week.”
Of course, it is easy to point fingers at 777 Partners; it is their alleged late payments, alleged business practices and dwindling reputation that has led to this situation in the first place.
However, there are also questions that need to be asked of the league’s own due diligence process to allow 777 such a major stake in the sport, the board’s oversight of both CEO Aaron Radin’s business plan and the execution of that business plan, along with the federations own checks on allowing such an investor into the game.
Despite the concerns, many within the BBL believe that 777’s investment and Radin’s plan has significantly increased the league’s visibility and appeal to sponsors and investors.
They argue that the current discussions with investors (and investment that at least two franchises have secured) would not have been able to happen without 777 being the first to come to the table, making their involvement very much a double edged sword.
Not that we’re aware.
The only thing similar that comes to mind is in 2014 when FIBA suspended Japan from international competition as a result of the Japanese Basketball Association’s failure to merge the 22-team Basketball Japan League and the 13-team National Basketball League, which is in violation of its general statutes.
Everything points to a new company being set up by the clubs, without 777’s involvement, to be awarded the license ahead of the new season.
Of course, this largely depends on whether or not BLL challenge (or have the money to challenge) the BBF’s decision to terminate the license.
It is most likely there will be an interim license put in place for a period of 12 months, while the terms for a longer license will be drawn up.
“The immediate picture is what’s an interim structure and set of arrangements which will enable the league to be run properly,” Grant said.
“I’m very aware, for example, that tickets have gone on sale through the clubs and so on.
“It’s slightly sensitive because the clubs, of course, are shareholders in Basketball League Limited. But one bit of good news is that the clubs are used to being in a position where they’re effectively running the league. The structure and arrangements that we’re looking to put in place and are working on, obviously have the clubs at their heart.
“As I say, there are some sensitivities around that, in terms of their position relative to the business which has just had the license taken away, but it’s for them to manage those.
“It’s for us to do everything we can to facilitate, and to expedite, to speed up, a strong enough platform that we all know not only that the season can start, but it can end.”
He added the federation has two related streams of activity, one focusing on the long term licensing agreement, and one on the short term to save the coming season.
“The good news is that for us in preparing an interim license, we will hopefully be able quite soon have a really clear relationship with a licensee which will have its own governance and we’ll be able to deal with direct,” Grant concluded, adding he would expect them to be in a position to say more about the actual structure within a month from now.
What do you think of the decision and what will happen next? Let us know in the comments below!
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