The SportsMoney team over at Forbes has been knee deep in NBA valuations. Yesterday, they served up many lists ranking NBA teams and players in terms of most valuable, most and least profitable, and top earners. It’s pretty interesting information, considering we’re still only a couple of months removed from the NBA lockout, a time in which we were consumed with hearing about how NBA teams weren’t earning money and the plight of small market owners. The recent information shared by Forbes, if you trust it, helps provide context to the conversation. It gives you a decent peek into the business of the NBA while gaining a better understanding of what makes the league and teams thrive.
The biggest takeaway is that the NBA desperately needed a revenue sharing system in place. Without it, teams in smaller markets would continuously bleed money trying to compete with big market teams. Even while losing, teams like my Knicks will always make the cash register ring because of the multiple streams of revenue available to them as a result of being in New York City.
As you’ll see below, teams that have some type of equitable cable partnership are the most valuable. There’s a ton of money in the cable industry and that’s one of the driving forces behind teams in larger markets being able to earn so much money away from the court. And another reason for the ongoing standoff between Time Warner Cable and the NY Knicks, who are owned by Cablevision. For example, this off season, the Lakers inked a 20-year television deal with Time Warner Cable worth an average of $20 million a year, which is valued at $3 billion. This lucrative deal boosted the Lakers value by a whopping 40% and allowed the Lakers to surpass the Knicks as the most valuable NBA team. And while smaller market teams have deals with RSNs their earning potential is a small fraction of what the Lakers were able to attain.
Here are additional highlights from Forbes’ research:
- Since last year, the NBA’s overall value has increased to a record-high of $393 million or 6.5%, thanks to lucrative TV deals and a new CBA in which the percentage of total league revenues that players receive were cut from 57% to a range of 49% to 51%. In terms of dollars, it puts $250 million back in the pockets of owners.
- Thanks to the LeBron James effect, local and national TV ratings were up across the board, last season. TNT saw a 45% ratings increase while ABC and ESPN’s ratings increased by 30% and 29%; respectively. And locally, the Heat’s average rating doubled. The increase in ratings and attendance caused the team’s overall revenue to increase by $34 million.
- And conversely, the LeBron James effect seems to be sinking the Cleveland Cavaliers, somewhat. TV ratings dropped by 54%, a league worst, but removing James’s contract from the books helped the team turn its biggest profit ever. A $30 million payroll cut and no luxury tax helped the team earn $33 million in operating income, third best in the NBA.
- The Lakers aren’t the only team benefiting from TV dollars. Another major player in the cable space, Comcast SportsNet, paid the Golden State Warriors approximately $50 million up front and almost tripled the annual rights fee by paying $25 million versus the $9 million they’ve paid in the past. The deal lasts for 18 years. With the young talent on the team and the excitement of new head coach Mark Jackson, the Warriors will continue to increase their valuation.
- Comcast SportsNet also struck a new deal with the Boston Celtics last summer that extends their current deal another 20 years. As a result, the Celtics now have a 20% equity stake in the network, more than doubling the team’s local media revenue.
- Despite the Knicks having a losing record this season, that didn’t stop them from cashing in on their first winning season in 10-years. They earned a shopping $75 million in operating income. Thirsty and loyal fans, dug deep into their wallets and bought out season ticket plans for the first time in a while; despite a 49% increase in ticket prices.
- The LA Lakers are the most valuable team and the Milwaukee Bucks are the least valuable, yet if the season were to end today, both teams would be seeded No. 8. Meanwhile the Knicks, the second most valuable team in the league, would be cleaning out their lockers. A note like this contradicts everything we believe in terms of small market teams being unable to compete, but the Knicks remain an anomaly and mystery.
- The Los Angeles Clippers were ranked No. 20 and are valued at $324 million, a 6% increase over last year. With the CP3 signing, I’m sure their value will increase even more next season. Meanwhile the league-owned New Orleans Hornets are in the middle of the pack and valued at $285 million.
- Despite the Hawks reaching the playoffs for the past three seasons, they continue to struggle. Both ratings and attendance are down for the team; which resulted in a loss of $15 million and a decrease in valuation of 8%.
10 Most Valuable Teams
- LA Lakers ($900 million, 40% increase from 2010, $24 million operating income)
- NY Knicks ($780 million, 19% increase from 2010, $75 million operating income)
- Chicago Bulls ($600 million, 17% increase from 2010, $59 million operating income)
- Dallas Mavericks ($497 million, 13% increase from 2010, loss of $3.9 million operating income)
- Boston Celtics ($482 million, 7% increase 2010, $7.7 million operating income, $7.7 million operating income)
- Miami Heat ($457 million, 8% increase from 2010, $26 million operating income)
- Houston Rockets ($453 million, 2% increase from 2010, $18 million operating income)
- Golden State Warriors ($450 million, 24% increase from 2010, $22 million operating income)
- San Antonio Spurs ($418 million, 3% increase from 2010, $14 million operating income)
- Phoenix Suns ($395 million, 4% decrease from 2010, $13 million operating income)
5 Least Valuable Teams
- Charlotte Bobcats ($277 million, 1% decrease from 2010, loss of $25 million operating income)
- Minnestoa Timberwolves ($272 million, 3% increase from 2010, loss of $6.8 million operating income)
- Atlanta Hawks ($270 million, 8% decrease from 2010, loss of $15 million operating income)
- Memphis Grizzlies ($269 million, 1% increase from 2010, loss of $25 million operating income)
- Milwaukee Bucks ($268 million, 4% increase from 2012, loss of $7.6 million operating income)
For more information and to see where your team ranks, click here. If you’d like to learn which NBA players are the top earners, go here, or to find out which teams are the most and least profitable, go here.