The Sacramento Kings are a professional basketball team that plays in the National Basketball Association (NBA). After years of relocating and changing names, The Kings settled down in Sacramento, California in 1985. After buying the team in 1998 for approximately $150M, the Maloof family decided to sell the team in 2013 for approximately $535M to a group led by Vivek Ranadive.   

Due to the regulatory changes in ownership of the NBA teams, private equity firm, Arctos Sports Partners was able to buy the 17% stake in Sacramento Kings in a deal that values the basketball team at $1.8B. 

In 2021, the NBA changed the ownership rules allowing institutional investors to own up to 20% of an NBA basketball team. This regulatory change led to increasing the pool of potential investors, which caused higher demand that resulted in higher valuations. Since the rule change, Arctos Sports Partners has made an investment in two NBA teams. In April 2021, Arctos purchased 5% of the Golden State Warriors in a deal valued at a reported amount of approximately $5B. A few months later, Arctos Sports Partners purchased 17% of the Sacramento Kings in a deal valued at approximately $1.8B.   

It is important to proactively look for regulatory changes that can affect an entire industry. Changing certain regulations may change the demand for the investment, which affects the value of the companies.