For you to be able to create a Host Upgrade baseline or a baseline group, you need to have ESXi Images imported to the vSphere Update Manager server's repository.
The following procedure will help you import an ESXi Image into vSphere Update Manager's repository:
Connect to vCenter Server as an administrator using the vSphere Client.
Go to Home | Update Manager.
Navigate to the ESXi Images tab and click on Import ESXi Image to bring up the Import ESXi Image wizard.
In the Import ESXi Image wizard, browse to add an ESXi Image and click on Next.
It will upload and import the image, as shown in the following screenshot:
Once the upload is complete, the wizard will display the image details.
Subsequently, the wizard will prompt you to create an upgrade baseline. Enter a baseline name and click on Finish. On this screen, you can choose not to create a baseline by unchecking the Create a Baseline using the ESXi Image checkbox.