Billionaire Steven Rales has reached an agreement to purchase a 15% minority stake in the Indiana Pacers at a $3.47 billion valuation, according to multiple people familiar with the transaction.
Rales, whose brother Mitchell is an investor in the Washington Commanders, now owns 20% of the NBA team, according to the people, who were granted anonymity because the details are private. Rales previously purchased a 5% stake in the Pacers, which hasn’t been previously reported.
The deal includes a possible path to control for Rales should the Simon family ever choose to sell, according to two of the people. That could be the standard “right of first refusal” if the owners ever want to sell, or a “right of first offer,” which gives the buyer an exclusive window to secure a deal before a wider sale process is launched.
Herb Simon, the chairman and owner of Pacers Sports & Entertainment, released a statement on Thursday evening.
“My good friend, Steven Rales, who has strong Hoosier ties and is a graduate of DePauw University and co-founder of Danaher Corporation, which is the owner of Indiana-based life sciences company Beckman Coulter, expressed an interest in acquiring a minority investment in the franchise,” the statement said. “After considerable discussion, Steven is going to become a minority owner of 20% of the franchise pending league approval. Management of the franchise remains under Simon family control. The Simon family is as committed to Indiana today as we have been since we moved here from New York in the 1960s.”
Attempts to reach Rales through Danaher Corp., where he serves as board chair, weren’t immediately successful.
Valuations in the NBA have increased dramatically in recent years, a trend punctuated by Mat Ishbia’s $4 billion purchase of the Phoenix Suns late last year. Both the Milwaukee Bucks and Dallas Mavericks were valued above $3 billion in recent transactions; Michael Jordan recently sold the Charlotte Hornets for $3 billion.
Last year, Sportico valued the Pacers 22nd in the NBA at $2.02 billion, a number that will increase dramatically when the number is updated later this year. The team was 23rd in revenue, at $275 million.
The Pacers are owned by the Simon family, which purchased the team in 1983 in an $11 million deal. Herb Simon, 89, is one of the NBA’s longest-standing governors, and he serves on the NBA’s equivalent of an executive committee. His eldest son, Stephen, is widely expected to take over as governor after his father.
Rales and his brother are co-founders of Danaher (NYSE: DHR), which has grown via acquisition into a wide-ranging science and technology manufacturing firm. He served as CEO from 1984 to 1990 and has been chairman of the board since 1984. Rales is worth $7.5 billion, according to Forbes.
Led by 23-year-old star Tyrese Haliburton, the Pacers are currently 9-7, in sixth place in the Eastern Conference. The team is averaging 15,831 fans per home game this season, the lowest total in the NBA.
With assistance from Scott Soshnick.
(This article has been updated in the fourth and fifth paragraphs with a statement from Herb Simon.)