Biggest Takeaways from Forbes' Evaluation of the NBA
Most days are good days to be an NBA owner, but life has gotten even sunnier. According to a fascinating Forbes magazine report, the league has gotten dramatically wealthier over a short period of time. From the article:
The average NBA team is worth $509 million, a 30% increase over last year. The increase is due to higher revenue from television, new and renovated arenas, and the NBA’s new collective-bargaining agreement, which reduced player costs from 57% of revenues to roughly 50%.
Such information might be cold comfort to Sacramento Kings fans, as the fate of their team dangles in a stormy sea of Maloof debt and enterprising Seattleites. Such information might also annoy fans who had to hear just how impoverished NBA owners were during the lockout that significantly enriched them.
But there's more in the report than information about how the league got rich in the aggregate. The article also gives insight into what makes an NBA team valuable.
In addition to team values, Forbes released its list of the richest players. That one is easier to figure out from afar (we can all look up the salary figures), but still, the list gives insight into which guys get the most endorsements.
The Lockout Was a Sick Joke
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As Kelly Dwyer of Yahoo! notes, the Forbes report makes light of David Stern's complaints about money lost and business feasibility during the 2011 NBA lockout. The NBA is a healthy, thriving business, and it should be further bolstered by an upcoming national television contract.
If NBA teams truly are worth 30 percent more than they were in the last valuation, and if that adds up to billions in the collective, you have to wonder about how broke these owners really were. It was all a sham, as proclamations of poverty were based on the current national television contract.
The NBA should sign a new TV deal soon, and the sports television market is currently exploding. In a DVR world where live sports demand higher ad rates, it's hard to see how ownership could be cash bereft in almost any circumstance.
The Golden State Warriors Were a Good Purchase
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Lacob had the foresight to see how a new collective bargaining agreement would boost his investment's value. He also actually figured out a way to make the team win.
The Warriors are now the eighth most valuable franchise in the NBA at $555 million.
When losing, the Warriors are just a sad tale of an ignored Oakland sports franchise. When winning, the Warriors summon the population, energy and big money of the Bay Area. Lacob's team is also all the more celebrated and watched because the victories seem so incredible after decades of losing.
Clippers Show That Location Isn't Everything
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The Los Angeles Clippers have finally gotten better than their arena neighbor, and they boast an exciting young star in Blake Griffin. He's in all the commercials, and Chris Paul is in all the MVP discussions. In theory, this should put the Clips on that Laker level.
Not so fast. The Forbes evaluation has the other Los Angeles team slated at 18th in value. Donald Sterling's team is worth a "mere" $430 million on the open market, despite all the buzz surrounding his franchise.
Decades of losing will do that to a team. As for Sterling, the lack of a financial windfall couldn't have happened to a nicer guy.
Seattle Is Boosting Sacramento's Value
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You wouldn't expect to find small-market Sacramento listed at No. 11 in the Forbes value rankings, but here we are. It has less to do with Sacramento and more to do with Seattle.
The lack of a Seattle team represents a gaping hole in the NBA economy. Just having a team up for sale, as the Kings are, means that an owner gets to reap a higher profit than he ordinarily would at any other time in NBA history.
Prospective Seattle owner Chris Hansen might not want to overpay, but he's already got an arena deal in place and the means to make this team work. Incompetent and disorganized as they are, the Maloofs will be rewarded for Hansen being competent and motivated.
LeBron James Makes More Than Kobe Bryant—off the Court
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I thought those Turkish Airways ads paid more than that. After all, if they were roping in Kobe and Lionel Messi, they had to be rolling in some cash.
At least Bryant can take solace in being basketball's highest-paid player. He's set to make $27.8 million this season.
The Thunder Are Transcending Their Location
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That can put a drag on franchise value, but having Kevin Durant signed long-term is quite the boon. The Thunder are 12th on the Forbes list at $475 million.
While the salary situation in OKC is rather tight, a wealthy owner would be happy to have a team with the aforementioned Durant, Russell Westbrook and Serge Ibaka. Think about it this way: Of the teams on this list, how many are a virtual guarantee to fight for championships even seven years from now?
Nobody Wants to Buy from Dwight Howard
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It's ironic that Dwight Howard is in the All-Star Game because fans voted him in. Can you find anybody who loves this guy?
While his salary is immense at $19 million this season, his endorsements are relatively meager. Howard, who was considered the second- or third-best player in the league before this season, is only the eighth-richest player with all earnings combined.
At "only" $7 million in off-court earnings, Dwight makes nearly one-sixth of LeBron's take in advertising bucks. Howard's even behind the oft-injured Amar'e Stoudemire, a guy who can't even start for his New York Knicks team.