The NBA’s owners cried poverty during the last round of collective bargaining agreement negotiations, and partly as a result, the league was able to get a much more favorable split of basketball related income in relation to what goes to the players.
After the latest round of franchise valuations that was released by Forbes, it’s going to be extremely difficult for them to try that tactic again.
The average team valuation jumped 74 percent from a season ago, and the average franchise value is now at $1.1 billion.
From Kurt Badenhausen of Forbes:What do you get when you combine a massive new $24 billion television contract, a nearly six-year bull market in equities creating tremendous wealth, and cheap credit? You get a massive rise in sports franchise values, with the NBA serving as ground zero for the current boom. The average NBA team is now worth $1.1 billion, 74% more than last year. It is the biggest one-year gain since Forbes began valuing teams in the four major U.S. sports leagues in 1998. ...
There are now 11 NBA teams worth at least $1 billion, by our count, compared to three a year ago. The Los Angeles Lakers lead the way at $2.6 billion, up 93% over last year. The Lakers finished with their second worst record in franchise history at 27-55 last season and are faring even worse this year, but the team has the richest local TV deal in the sport: a 20-year, $4 billion contract with Time Warner that kicked off in 2012. ...
The collective bargaining agreement signed between players and owners in 2011 has nearly eliminated money-losing teams, barring wild spending sprees on players (see Brooklyn 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 $232 million last year. The result: the Nets were the only NBA team to lose money last season on an operating basis if you include all arena revenue.
One interesting thing to note, and that’s the fact that certain teams may draw bidding wars that drive the price up well past the current valuations. The Lakers and Knicks, for example, would be prime candidates to sell for hundreds of millions more than their already insanely-high price tag.
There’s a lot to digest, there, but the bottom line seems to be this: No matter what a team’s fiscal year balance sheet may look like (i.e., even if it shows a loss), there’s no denying that owners are making tons of money in the long run by hanging onto an NBA franchise. And don’t think the players won’t notice the next time it’s time to slice up the revenue-sharing pie.
Here’s the complete list, which, for the record, is fairly derided by many in the business each time it’s released.
| Rank | Team | Current Value ($mil) | 1-Yr Value Change (%) | Debt/Value (%) | Revenue ($mil) | Operating Income ($mil) |
|---|---|---|---|---|---|---|
| 1 | Los Angeles Lakers | 2,600 | 93 | 2 | 293 | 104.1 |
| 2 | New York Knicks | 2,500 | 79 | 0 | 278 | 53.4 |
| 3 | Chicago Bulls | 2,000 | 100 | 3 | 201 | 65.3 |
| 4 | Boston Celtics | 1,700 | 94 | 9 | 173 | 54.9 |
| 5 | Los Angeles Clippers | 1,600 | 178 | 0 | 146 | 20.1 |
| 6 | Brooklyn Nets | 1,500 | 92 | 19 | 212 | -99.4 |
| 7 | Golden State Warriors | 1,300 | 73 | 12 | 168 | 44.9 |
| 8 | Houston Rockets | 1,250 | 61 | 8 | 175 | 38.0 |
| 9 | Miami Heat | 1,175 | 53 | 8 | 188 | 12.6 |
| 10 | Dallas Mavericks | 1,150 | 50 | 17 | 168 | 30.4 |
| 11 | San Antonio Spurs | 1,000 | 52 | 8 | 172 | 40.9 |
| 12 | Portland Trail Blazers | 940 | 60 | 11 | 153 | 11.7 |
| 13 | Oklahoma City Thunder | 930 | 58 | 15 | 152 | 30.8 |
| 14 | Toronto Raptors | 920 | 77 | 16 | 151 | 17.9 |
| 15 | Cleveland Cavaliers | 915 | 78 | 22 | 149 | 20.6 |
| 16 | Phoenix Suns | 910 | 61 | 20 | 145 | 28.2 |
| 17 | Washington Wizards | 900 | 86 | 14 | 143 | 10.1 |
| 18 | Orlando Magic | 875 | 56 | 17 | 143 | 20.9 |
| 19 | Denver Nuggets | 855 | 73 | 1 | 136 | 14.0 |
| 20 | Utah Jazz | 850 | 62 | 6 | 142 | 32.7 |
| 21 | Indiana Pacers | 830 | 75 | 18 | 139 | 25.0 |
| 22 | Atlanta Hawks | 825 | 94 | 21 | 133 | 14.8 |
| 23 | Detroit Pistons | 810 | 80 | 23 | 144 | 17.6 |
| 24 | Sacramento Kings | 800 | 45 | 29 | 125 | 8.9 |
| 25 | Memphis Grizzlies | 750 | 66 | 23 | 135 | 10.5 |
| 26 | Charlotte Bobcats | 725 | 77 | 21 | 130 | 1.2 |
| 27 | Philadelphia 76ers | 700 | 49 | 21 | 125 | 24.4 |
| 28 | New Orleans Pelicans | 650 | 55 | 19 | 131 | 19.0 |
| 29 | Minnesota Timberwolves | 625 | 45 | 16 | 128 | 6.9 |
| 30 | Milwaukee Bucks | 600 | 48 | 29 | 110 | 11.5 |
