During October's smiles-all-around press conference to announce the NBA's massive new nine-year, $24 billion broadcast rights contract, a pact that will nearly triple the league's annual intake from its TV deal with ESPN and Turner Sports, Washington Wizards owner Ted Leonsis summed up the state of financial play rather succinctly.
"There's never been a better time to be an owner of an NBA franchise — or, frankly, any professional sports team," he said.
That assessment sure seems to be borne out in the latest crop of NBA franchise valuations published Wednesday by Forbes magazine, which pegs the average value of an NBA franchise at $1.1 billion, a 74 percent increase over last year's average and a record-setting spike that stands as "the biggest one-year gain since Forbes began valuing teams in the four major U.S. sports leagues in 1998."
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Just two years removed from the magazine's first-ever billion-dollar valuations, earned by the Los Angeles Lakers and New York Knicks in 2013 in the wake of a lockout that slashed league expenses and transferred hundreds of millions in revenues from players to owners, the magazine now lists a whopping 11 franchises as being worth more than $1 billion:
1. The Lakers: $2.6 billion, a 93 percent increase over last year's estimate;
2. The Knicks: $2.5 billion, a 79 percent year-over-year bump;
3. The Chicago Bulls: $2 billion, a full doubling of the 2014 figure;
4. The Boston Celtics: $1.7 billion, up 94 percent;
5. The Los Angeles Clippers: $1.6 billion, a staggering 178 percent increase that still somehow comes in under the actual price tag that former Microsoft CEO Steve Ballmer paid for the franchise back in May (but does top the estimate offered by Bank of America prior to Ballmer's senses-shattering bid);
6. The Brooklyn Nets: $1.5 billion, a 92 percent year-over-year increase, which sure helps you understand why Mikhail Prokhorov is, if not actively pursuing an exit, at least very excited to listen to offers (especially considering the Nets' free-spending ways led them to be the only NBA club that actually lost money last year);
7. The Golden State Warriors: $1.3 billion, a 73 percent bump from 2014, and nearly three times as much as Joe Lacob, Peter Guber and their partners paid for the franchise in the summer of 2010;
8. The Houston Rockets: $1.2 billion, a 61 percent increase;
9. The Miami Heat: $1.175 billion, up 53 percent from last year;
10. The Dallas Mavericks: $1.15 billion, a 50 percent rise that comes more in line with owner Mark Cuban's statement last January that his team was "worth well over a billion";
11. The San Antonio Spurs: $1 billion, a 52 percent increase over last year's model, which seems like a fairly reasonable reward for winning the NBA championship.
Forbes estimates that 17 franchises, more than half the league, are now worth at least $900 million; that 24 franchises, a full 80 percent of the league, are worth at least $800 million; and that all 30 franchises are worth at least $600 million.
In other words, according to the magazine's math, every single NBA franchise is now worth more than the highest purchase prices anyone had ever paid — the reported $550 million that Leonsis paid to take full control of the Wizards after the death of longtime owner Abe Pollin and that Wesley Edens and Marc Lasry plunked down to take the Milwaukee Bucks off former U.S. Sen. Herb Kohl's hands last April — before the combination of Donald Sterling's boorishness and Ballmer's bombastic billions turned the market on its head last May.
So, yeah. Good times for owners.
There will be, as there always is, balking at the Forbes calculations, since the figures are based on a variety of factors — reported league and team revenues and expenses, operating income and debt, the value of national and local television contracts, arena deals, brand value, etc. — without full access to the NBA's books. If anything, though, the magazine's figures seem to tend to err on the low side of things, as Neil Greenberg wrote at the Washington Post's Fancy Stats blog after Ballmer bought the Clippers:
According to the  Forbes valuation, the Bucks were worth a league low $405 million based on revenues of $109 million but ended up being sold for $550 million to a hedge fund group headed by Wesley Edens and Marc Lasry – a higher multiple than many thought possible. They weren’t the only franchise to sell for higher than Forbes estimated they were worth.
The Golden State Warriors were purchased for $450 million in 2010 — more than the $315 million that Forbes estimated they were worth the prior year. The Washington Wizards were bought for $551 million that same year, nearly 76 percent over Forbes’s then estimated price of $313 million.
The Los Angeles Clippers, on the other hand, [were valued at] $575 million based on revenues of $128 million and could fetch an even higher multiple of earnings.
Which, obviously, they did. That's why the other franchises that are either officially on the market (like the Atlanta Hawks) or unofficially up for grabs (like Prokhorov's Nets) figure to be targets of the sort of serious bidding wars that could nudge ownership groups in other locations to think hard about putting their own interests up for sale, too.
Then again, owners might not want to cut bait too early, considering how good they've got it now, as Forbes' Kurt Badenhausen writes:
The collective bargaining agreement signed between players and owners in 2011 has nearly eliminated money-losing teams, barring wild spending sprees on players [like the Nets']. Under the CBA, the players’ share of basketball related income was reduced from 57% to 50% (it is only around 47% of total revenue when you include all arena revenue streams). Revenue sharing to prop up the low revenue teams more than tripled from $55 million under the old CBA to $232 million last year. [...]
The average NBA team had an operating profit of $23.1 million, a tick behind last year’s record tally of $23.7 million. Total leaguewide revenue hit $4.8 billion, or $160 million per team, up 5% from last season.
Badenhausen's assessment doesn't square with NBA Commissioner Adam Silver's statement back in October that one-third of the NBA's teams are still losing money on an annual basis, although he said he expected the new influx of cash from the TV deal to help remedy that.
NBA players, well aware of just how healthy a market there is for the franchises for which they play, aren't buying what the commish is selling on that front. Neither is the woman who now leads their union. Here's National Basketball Player's Association executive director Michele Roberts on the claim that 10 owners are losing money, as offered during an interview with ESPN the Magazine's Pablo Torre in which she also called the league's salary cap "un-American" and offensive to her DNA:
"I initially just started laughing, to be honest with you," she said of her reaction to that statistic. "I know that as a result of the last CBA, at least 1.3 billion dollars in revenue that would have otherwise been on the players' side is now on the owners' side. I see the valuations of these teams going through the roof. ... How much more do you need to make money?"
I'm not sure what kind of answer Silver or the NBA's Board of Governors will offer to Roberts' question when the two sides come to the negotiating table to re-open the CBA in 2017. But if franchise prices keep rising at a rate that outstrips even Forbes' valuations, it seems likely that we'll find out.
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