• Krause House DAO plans potential crowdfunded NBA team acquisition

  • Two men going by the aliases Flex Chapman and Commodore have turned their childhood aspirations of playing in the NBA into a way to own an NBA team.

    A group called Krause House is hoping to do something ambitious: raise money to buy an NBA franchise. The group has already raised $4 million in ETH through a crowdfunding effort, which is only about 0.3 percent of the cost of the cheapest NBA franchise, the Memphis Grizzlies.

    The group raised 200 ETH in the first 15 minutes by selling NFTs on Mirror to grant buyers access to its Discord servers and the ethereum token KRAUSE.Krause House has three levels of membership, made possible by three types of NFT sales, Courtside (costing 10 ETH), Club Level (costing 1 ETH) and Upper Level (costing 0.1 ETH), with Courtside granting the highest level of access and the highest allocation of KRAUSE tokens.The number of Krause tokens is equivalent to the governing stake a member will have. At the time of writing, the DAO has raised 1,000 ETH through the NFT sale.Krause House was founded by friends who go by the pseudonyms Flex Chapman and Commodore.

    Will the NBA be on board?

    The new effort, named after now-deceased Chicago Bulls manager Jerry Krause, has amassed more than 2,000 members in this latest effort.The DAO has released a “flight document” that describes its vision of allowing fans to own a portion of the club (much like owning stock) and granting management rights to participate in club decisions.

    It’s unclear if the NBA will allow this form of management or ownership, and Krause House isn’t optimistic. The faceless organization is unknown and falls into uncharted regulatory and legal territory. In order for Sotheby’s to allow ConstitutionDAO to bid on the rare document, ConstitutionDAO had to establish a partnership with a crypto exchange, as Sotheby’s does not yet allow DAOs to bid in auctions.ConstitutionDAO’s bid of over $40 million ultimately failed to secure a rare copy of the U.S. Constitution, losing to Citadel CEO Ken Griffin.

    Krause House’s ownership model

    There are three proposed models for Krause House participation in team activities: majority decentralized ownership, minority decentralized ownership (DAO), and minority decentralized ownership (social tokens). The first would allow for the purchase of “majority rights” (over 50%) to the team, with ownership, funding, and governance all on the chain.DAO members would have a voice in ownership decisions, team placement, approval of key leadership candidates, and marketing and events. The minority dispersed ownership model would see the DAO own a minority stake in the team and have some rights in decisions about team placement, marketing and campaign efforts, and some say in the hiring of executive positions.Krause House acknowledged that the NBA would likely agree to the second minority stake over the first option because they would not allow a faceless organization to own a majority stake in the club, no matter how much money is offered.

    This is the first time the concept of a DAO has been linked to team ownership. Previous partnerships entered into involved fan tokens with the aim of driving participation and generating revenue for the sports team, similar to FC Barcelona, where fan tokens were the medium of exchange for gaining exclusive NFT and special event access.

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