Kestelman’s cash has National Basketball League bouncing along

No Australian has spent more money pursuing their sporting dream in recent years than Larry Kestelman.

National Basketball League owner and property developer Larry Kestelman in Melbourne. Picture: Stuart McEvoy.

No Australian has spent more money pursuing their sporting dream in recent years than Larry Kestelman.

The Melbourne property developer, technology entrepreneur and rich lister is understood to have spent at least $35 million rebuilding the National Basketball League in the past three years, and he’s prepared to shell out even more to achieve his goal of turning it into a world-class sporting body.

While the NBL is nowhere near getting the billion-dollar broadcast deals that cricket, the AFL and NRL have, Kestelman has struck a series of canny deals that have him poised to claw back a large amount of the cash he has outlaid on his beloved sport and put the NBL on a solid financial footing.

With the 2018-19 NBL season set to start next week, Kestelman reveals to The Weekend Australian that strong crowd numbers and commercial growth have put the league in its best ever position, and that he wants to continue to be the only individual owner of a sports league in Australia for the long term.

“I’ve put tens of millions of dollars into this business. But I truly believe, long term, it will be a good asset. We are in it for the long term and we will keep going in building a sustainable business. We have a vision and we have only just begun. I really think this is a golden era for the NBL.”

Kestelman’s estimated $749m fortune traces back to the sale of his internet and phone company Dodo for $230m in 2013, though he has been developing property for 26 years. His LK Property Group is building the $700m Capitol Grand luxury project on Melbourne’s Chapel Street and he sold his headquarters to a Chinese investor for $60m in June, trebling his initial investment in five years. Kestelman also owns stakes in several technology firms and the extremely profitable BPO Acquire call centre and outsourcing business in The Philippines.

Then there is basketball, in which he became the first individual owner of a major Australian league with a $7m investment in 2015. He admits to being a control freak — and it has taken up a lot of his time — but says it is now on a firm footing for the first time since the 1990s.

All the metrics are heading in the right direction. The NBL has signed sponsorship deals with Hungry Jack’s, Kmart, Qantas, Chemist Warehouse and MG. Last season, the league attracted record total crowds of 762,871 — up 16 per cent in two seasons — and cumulative broadcast audiences of 17 million, up 51 per cent from the previous year. Most clubs are playing to about 90 per cent capacity of their home stadiums.

The exception to that has been the Sydney Kings, which have struggled on the court in recent years and in attracting big crowds to Qudos Arena at Olympic Park. But in a major coup for the NBL, Australian star Andrew Bogut signed for Sydney after a stellar 13-year career in the US. It brings a marquee name to the NBL and season ticket sales in Sydney have increased markedly.

“Crowds are not our problem any more,” says Kestelman. “The product is fantastic. Our biggest challenge going forward is media rights. We are still a novice in that space.”

Bogut’s presence should help Kestelman and the league when it comes to getting more broadcast revenue, the first step of which was an agreement with Nine Entertainment Co struck in August for the next three seasons.

Though the Nine deal does not come with an upfront fee, it is an advertising revenue-share deal that could see an additional estimated $5-10m flow to the NBL annually, along with the ability of the league and its clubs to sign more lucrative sponsorship contracts given the wider television exposure, even if ratings are still low relative to sports like soccer and rugby union.

Netball Australia’s similar deal with Nine provides a good indication of the financial potential of the NBL and Nine deal. The sponsorship income netball received shot up from $3.9m in 2016 to about $12.3m last year, the first season of its contract with Nine and Telstra.

The NBL also has one more season to run on its contract with subscription television company Fox Sports. But even more crucial was the NBL picking up the broadcast rights for two Australian Boomers matches against the star-studded United States men’s team in Melbourne next August, as part of a deal with Basketball Australia to gain rights to 15 national men’s and women’s team games.

One television analyst said at least the first of the Boomers versus US matches could be among the top 20 most-watched TV programs across Australia in 2019, meaning Kestelman and the NBL should be able to negotiate a rights fee worth several million dollars.

Kestelman this past off-season has sold 70 per cent of his Melbourne United team in a series of transactions that value the club at close to $10m, and also has plans to put the Brisbane Bullets on the market within the next six months. (The remaining six NBL clubs are privately owned.)

He has also convinced Los Angeles investor and owner of an English soccer league club Romie Chaudhari to part with an estimated $5m to $8m to buy the licence for an expansion team, to be based in southeast Melbourne from late 2019.

“Romie bought into the vision of the league. Three years ago no one knew we existed, but we had no less than a dozen others looking to take on that licence and half were from overseas. If we wanted to issue more licences we would have no shortage of buyers for them. But I am very cautious and don’t want to dilute the league.”

Other commercial deals include gaining the rights to 3-on-3 basketball, which is set to become an Olympic sport in 2020, Harlem Globetrotters games in Australia and New Zealand, and even a university-based development league. Meanwhile, Kestelman’s son Justin heads the First Ever clothing label that supplies the NBL uniform and has begun selling casual gear. “It’s all part of building out the verticals because we need to find other ways to commercialise the sport,” says Kestelman.

Asked whether he will ever sell the NBL, Kestelman says he has had approaches from prospective investors but he will not cede control. “It would only be for a minority stake and with the right party, to help accelerate the league. But I’m not interested in giving control for others.

“We need to keep building the business and put the meat on the bone.”