It’s good news/not so good news for Los Angeles basketball: The Lakers are valued at $2.6 billion and the Clippers, who sold last year for $2 billion, are “just” $1.6 billion.
OK, so what’s a $400,000,000 loss to owner Steve Ballmer, who’s worth in the (Beverly Hills) neighborhood of $22 billion? According to the latest estimates from Forbes, the NBA is very healthy in LA and the other big markets. Actually, the NBA is brimming with tremendous financial health. Pumped by a massive TV deal, and an equally-massive tradition and brand, the Lakers once again are one of the most lucrative teams in American professional sports and lead the way in the NBA, just ahead of the Knicks ($2.5 billion). Forbes says there are 11 teams worth at least $1 billion, compared to just three last year.
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.
Ratings on SportsNet LA were off 54% last year, but the team still pocketed $125 million for the season from Time Warner. The team’s operating income (earnings before interest, taxes, depreciation and amortization) was an NBA-record $104 million in a year when Kobe Bryantmissed all but six games. The haul would have been even greater, but the Lakers were forced to contribute $50 million to the NBA’s revenue-sharing pool last season. The Lakers had the NBA’s highest revenue at $293 million, net of revenue sharing.
The value of the New York Knicks shot up 79% to $2.5 billion, ranking the team second overall (the Knicks edged out the Lakers last year). Ratings for Knicks games on MSG fell 29% as the team stumbled to a 37-45 record, but the team still drew the biggest TV audience in the NBA at 163,000 viewers per game on average. The Knicks’ income fell 45% last season after missing the playoffs and incurring a $36 million luxury tax bill.
Rounding out the top five are the Chicago Bulls ($2 billion), Boston Celtics ($1.7 billion) and Los Angeles Clippers ($1.6 billion).
To all this, fellow NBA owners say: Thank you very much, Mr. Ballmer!
Oh, and the players are happy, too. With the values of franchises soaring, helped largely by a $24 billion TV deal ready to kick in soon, the players and the union will surely seize upon this at the next labor negotiation. Any cry of “poverty” will either be met with covered ears or laughter.
The values of sports teams continue to grow because sports programming can’t easily be DVR’d. People want to see sports events live, and therefore must watch the commercials. More commercials means more money to the networks, which in turn sends cash to the owners and players. In that sense, the NBA has never been healthier.
The average NBA team, according to Forbes is worth $1.1 billion, a 74-percent jump from last year and the biggest one-year jump since Forbes began estimating the value of sports teams in 1998.
What’s interesting is the Atlanta Hawks and perhaps the Brooklyn Nets could be sold soon, and NBA owners and players will study those negotiations closely. The Hawks will sell completely while the next owner of the Nets may only purchase a large majority. Also, the Hawks are a mid-market team stuck in a city that historically has been cool toward the team (but not lately). Meanwhile, the Nets are the No. 2 franchise in New York but, like the Clippers, could get No. 1-like money in a sale.