Nearly half of the NBA’s 30 teams, according to Forbes, are worth over a billion dollars. The magazine’s recent round of team valuations revealed that, once taxes were considered, a winning Powerball ticket couldn’t even be traded in for a the majority ownership stake of the New Orleans Pelicans.
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Those Pelicans, at just $650 million, wound up stuck in last place according to Forbes – just behind the Milwaukee Bucks, who at $675 million are already showing a tidy profit from the team’s 21-month old purchase price of $550 million. The Phoenix Suns, led by an owner that wouldn’t spend money during Steve Nash’s peak years, a squad that has given up on its coach and future, and a team that has trouble luring fans to its arena, are somehow ranked 13th at $1 billion.
The usual suspects top the list. The New York Knicks, newly made less-laughable, are valued at $3 billion and top the list. The Los Angeles Lakers, a family-rundown organization, are at $2.7 billion. The Chicago Bulls, a squad that has paid the luxury tax just twice in this millennium, are at $2.3 billion. The Los Angeles Clippers, a team that somehow still officially counts Shelly Sterling as its No. 1 fan, come in at $2 billion.
The result: The average NBA franchise is now worth $1.25 billion, up 13% over last year on the heels of a 74% gain the previous year after the national media deals were completed.
The New York Knicks reclaim the top spot from the Los Angeles Lakers after a one-year hiatus, thanks to a new cable deal and the highest premium-seating revenue in the league at almost $90 million. The split of the media and sports assets of Madison Square Garden Company in September precipitated a new media rights deal for the Knicks with the MSG regional sports network. The 20-year pact kicks off this season and is worth $100 million in the first year. We value the Knicks at $3 billion, up 20% and fourth most among U.S. sports franchises behind only the Dallas Cowboys ($4 billion), New England Patriots ($3.2 billion) and New York Yankees ($3.2 billion).
The league’s 30 teams generated $5.2 billion in revenue last season and $900 million in operating profit (earnings before interest, taxes, depreciation and amortization). Both are records. The NBA’s 2011 collective bargaining agreement, which enhanced revenue sharing for poorer small market teams and cut player costs, means that every team except one—billionaire Mikhail Prokhorov’s Brooklyn Nets—turned an operating profit last season.
Short of running in the red, however, Prokhorov’s Nets remain the ideal for most if not all NBA owners at this point. All but one squad – the Buss-owned Lakers – are owned by groups that made their money through outside interests. We’re not attempting to sound trite when we say that most NBA owners aren’t out to make a massive profit, but to make themselves part of the game with their expensive toy. Their own well-heeled fantasy league, with a draft that runs 30-deep.
These could very well be halcyon days for the league.
Two different franchises are on pace to break the 1995-96 Chicago Bulls record for wins in a season. The league’s best and most popular player, Stephen Curry, wouldn’t tower over you nor look out of place in line at a supermarket; and you’d be too busy paying attention to his adorable daughter to even recognize him. Somehow, LeBron James has turned into an underdog. The NBA has a commissioner that on the surface appears above reproach, and its players union’s new executive director has her constituency’s best interest of paramount concern in a way that puts her predecessor to shame.
The new TV deal will bring in billions. The league and the union have already started negotiations on the next collective bargaining agreement. On the court, pace and space is the order of the day, and fans have more options than ever for ways to take in televised games, or fan-culled highlights that the league encourages its followers to put up on YouTube.
Trouble is on the horizon. ESPN, the league’s biggest television partner, expects cable subscribers to fight more vigorously for a la carte viewing plans, packages that would significantly cut the costs for television viewers who could give a rat’s tail about sports, as the ESPN series of networks acts as the biggest reason why cable and dish packages are so dear. Anticipating as much, the company has already started cutting costs and letting go of both notable and behind the scene employees.
The players will most certainly opt out of the current collective bargaining agreement in 2017. As was the case in 1998 and 2011 the same competitive bent and outsized egos that lure team owners to overspend on teams and players will lead to owners fighting back for the sake of winning things, and the league locking out its players. Whether or not this costs the NBA actual games is, as always, up to the hubris of the 30 team owners, and the NBA leadership that blindly follows their majority directive without reflex.
For now, however, things are good. Owners can point to their investments as both a stylized and smart one, and talk up all that TV-bred cap space to their minority ownership partners and season ticket-holders.
For now, the next round of drinks is on the owners. The bubbly comes courtesy of the bubble. Put it on the credit card, because what could possibly go wrong?
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