Krause House: Governing an NBA Team

Krause House is a DAO that plans to purchase an NBA team with the idea that Decentralized Sports Organizations (DSOs) will be the next era of sports franchise ownership. Though teams in the NBA are already governed in a slightly democratic manner, they are not fully owned and governed by hundreds of people; the NBA is currently highly centralized and fans have limited ways to engage with players and teams, something that Krause House hopes to alter. Fan ownership is an important feature of web3 and athletes are already starting to dive into NFTs and join communities with their fans.

There are currently a few fan-owned professional and semi-professional teams, such as the Green Bay Packers, who has allowed fans to purchase common shares every few years, but these shares are not eligible for dividends and cannot be resold. However, shareholders have some voting rights, namely the ability to select the board of directors. With little utility and no upside, this setup for the fan is quite limiting; Krause House is rethinking how traditional organization works for sports teams and how fans can enter the mix in a meaningful way, starting off with the NBA.

Krause House is starting to build up its community of fans, leaders in tech, NBA agents, coaches, trainers, ex-NBA players and media members. This array of expertise is incredibly important in order to ensure that decisions are made from those who are well-versed in that specific area rather than asking for input from every person, which is akin to DAOs establishing that technical decisions should be left to the technical team rather than allowing anyone to vote on those proposals.

The NBA: Who Runs It

The NBA is a self-managed limited corporation, whose members are the individual basketball teams known as franchises and are corporations themselves. Thus, all 30 of the teams – with an average franchise value of $2.2B – are all under one giant holding company, which is the NBA.

Each team has a General Manager, or GM, who oversees contract negotiation, player contracts, staffing coaches, and other executive decisions that deal with the team––GM responsibilities vary across teams. The role of a GM is complex and the candidate must have been a prior player or coach or have extensive experience in sports management in order to land the role to govern a team.

The NBA Commissioner oversees the holding company and operates as a pseudo-Chairman of the board; the majority owners of the teams and Commissioner tend to form the body that makes most of the decisions. The NBA operates a lot more democratically than say the NFL, making DAO governance perhaps a sensible idea for a franchise. There are about ~100 employees dedicated to each NBA team to keep things running smoothly.