NBA Power Rankings: The League's Best Businessmen

The NBA is a business, as we learned again last offseason when there was a lockout. Part of the business of basketball is winning games, but the larger part of the business is making money. That raises the question: who does the best job of that? Furthermore, how do you determine who does it the best?

How do you compare a large-market team with a small-market team? Oklahoma City is only the 16th-most valuable team, but does that make them the 16th-best run franchise? Is a team that averages more "revenue per fan" that divides the team revenue by the size of the metro area a better indicator than value? Oklahoma City ranks first there. 

Then again what else does Oklahoma City have to contend with? There's no other major sports teams there. New York City has three NHL teams, two NFL teams and another NBA team as well as Broadway and a host of other things. 

The truth is no "one" thing is the truest measure.

Forbes ranked all 30 NBA franchises based on franchise value, but it included with that a number of other criteria to address these nuances. I ranked all 30 teams based on several criteria, then sorted them based on the average rank.

Here are the criteria I used, and the reasoning I used in selecting them. All data was taken from Forbes.

1. Team Value (has to be a part of this).
2. Value/Debt Ratio (to see how much of that value is owed). 
3. Value Increase (average of one year and since 2001 to measure short- and long-term success). 
4. Operating Income (in other words, profit or loss the team had last year; profitability matters). 
5. Revenue per Fan (where more than one team exists, metro areas were halved)
6. Wins-to-Player Cost Ratio (to factor in winning; a 100 value is average, 120 value means that a team is getting 20 percent more wins per dollar, 80 means they get 20 percent less wins per dollar. Playoff wins count double). 

I'm not going to reproduce all the numbers here. You can get that from the Forbes list. My main thrust here is to see how the teams are ranked relative to one another. Based on the aggregate, here are the 10 best financially run teams in the NBA. 

The Rest of the League

Not everyone is going to be a fan of this top 10 list, so for their sake, here's how the rest of the teams ranked. Again, if you want to know the details, check the Forbes article. 

Rank	Team	Average Rank
11	Denver Nuggets	13.25
12	Portland Trail Blazers	13.75
13	Orlando Magic	14.17
14	Los Angeles Clippers	15.42
15	Utah Jazz	15.50
16	Phoenix Suns	15.83
17	New Orleans Hornets	16.75
18	Cleveland Cavaliers	17.17
19	Milwaukee Bucks	17.83
20	Sacramento Kings	18.08
21	Toronto Raptors	18.50
22	Indiana Pacers	19.83
23	Memphis Grizzlies	19.83
24	Detroit Pistons	19.92
25	Washington Wizards	21.58
26	Minnesota Timberwolves	22.00
27	New Jersey Nets	22.50
28	Philadelphia 76ers	22.67
29	Charlotte Bobcats	23.25
30	Atlanta Hawks	24.42

So here's the answer to the question that some people are going to want to know: why is Atlanta dead last?

They are the 28th-most valuable franchise and the only one that dropped more in value last year. Their debt-to-value percentage is 90 percent and they lost $14.7 million last year. 

Charlotte is doing everything it can to catch up to Atlanta though, and next year it might pass Atlanta as the worst financially run team in the Association. 

10. Leslie Alexander, Houston Rockets, 11.75

Why Here?

Valued at $453 million, the Rockets are the seventh-most valuable franchise in the league. Last year they also turned a $17.9 million profit, which is the eighth best in the league. They have also increased their value by $219 million over the last 10 years, which ranks them seventh in the league. 

Why Not Higher? 

Their revenue-to-fan ratio is only $18 per fan, which ranks them 22nd in the NBA. Their wins-to-player cost ratio is just 95, which ranks them only 13th in the league. 

All in all the Rockets are a fairly well-run team financially. Considering they have had the kinds of injuries they've had, it's pretty remarkable they are still in the payoff hunt, still turning a profit and still increasing in value. I expect that they will go up in next year's rankings as the team is playing better. 

9. Mark Cuban, Dallas Mavericks, 11.75

Why Here? 

The Mavericks are the fourth-most valuable team at $497 million. They also increased in value by 13 percent last year, which ranks sixth best in the NBA. Over the last 10 years they've grown $286 million in value, which is the third most in the NBA.

Finally, even though they were well paid, they had a 156 wins-to-cost ratio, a number enhanced by winning that trophy Cuban is smiling about in the picture above. 

Why Not Higher?

In spite of all the team success, their operating income was a $-3.9 million last year, which ranks 19th in the NBA.  They also have 40 percent of their value tied up in debt, which ranks 18th in the NBA. 

All in all Cuban is viewed as a billionaire fan who is owning a team for fun and doesn't care about the money. Whether that's true or not (I have no idea what's in his heart), he's still making money.

He's lost about an average of $12 million a year in operating income, but the team has grown in value by $217 million, or about $18 million a year. So depending on how you're looking at it he's actually made money. 

8. Joe Lacob and Peter Guber, Golden State Warriors, 11.42

Why Here?

They are the eighth-most valuable franchise in the NBA at $430 million. They increased by 24 percent in franchise value last year, the second highest of any team in the league. They netted $22.2 million last year, which is the seventh best in the NBA. 

Why Not Higher?

They are 21st in wins-to-player cost ratio, getting just 76 percent of the wins per dollar as the average team, ranking 21st in the league. They also have 33 percent of their team tied up in debt, which ranks 13th in the NBA.

The Golden State Warriors are the only team that did not make the postseason last year that are in the top 10. In fact they are one of only two teams to be in the top of the league, the other being the Los Angeles Clippers.

Their placement here is a real testament to the Warriors' fanbase. 

What's remarkable is that their franchise value has grown $284 million over the last 10 years in spite of the fact that they've only made the playoffs once since 1994. In the last decade they've operated at a profit in all but two years and have averaged a net profit of $8 million. 

Someone (meaning me) needs to bear this in mind the next time they write an article on the best fanbases. There is pretty ample evidence here that the Warriors have the most faithful fanbase in the league. Maybe they've earned the right to boo?

7. Wycliffe Grousbeck, Boston Celtics, 11.42

Why Here?

The Celtics are the fifth-most valuable franchise at $482 million. That's an increase of seven percent over the last year, which ranks eighth. They've increased in value $264 million over the last 11 years, which is sixth best. Their wins-to-player cost ratio last year was a respectable 118, which ranks seventh best. 

Why Not Higher?

They have 37 percent of their value tied up in debt, which is only 17th. Their revenue per fan is 19th at $21. They made just $7.7 million last year, which ranks 13th in the NBA. 

Since purchasing the team, Wycliffe Grousbeck has returned the team to respectability and worthy of the history their uniforms hold. 

Perhaps the most impressive thing for the Celtics is that they managed to keep player cost under control in spite of making it to the NBA finals twice with the same essential group of players, including three future Hall of Famers. They have managed to balance winning and finances. 

They should see their revenue go up this year as they just renewed their media contract. According to Forbes, 

"

This summer the Celtics worked out a new media rights agreement with Comcast SportsNet New England that will extend the current deal between the two sides 20 years through 2038. It gives the team a 20% equity stake in the regional sports network. The Celtics currently rake in less than $20 million a year from their RSN deal, way below market when compared with new deals for teams like the Los Angeles Lakers. The new deal should more than double the team's local media revenue. Celtics games on CSN averaged 116,000 households during the 2010-11 season, fourth-most in the league behind the Lakers (271,000), Bulls (157,000), and Knicks (138,000).

"

6. Clayton Bennett, Oklahoma City Thunder, 9.33

Why Here?

The team increased in value by six percent last year, which is 10th best in the league. The Thunder profited $24.5 million last year, which was fifth best. They are tied for the best team in the league in terms of revenue per fan ratio at $67. Finally they are third best in the NBA in terms of wins-to-cost ratio. 

Why Not Higher?

They are the lowest value ranked team in the top 10 as they are only 15th in franchise value. They have 40 percent of their value tied up in debt, which is 19th.

The Oklahoma City Thunder are in their third year of having turned things around and they are slowly growing in value. In the last three years they've netted about $60 million and grown in value another $40 million. That's a total of $100 million in three years! That's not bad when the league is struggling for small-market teams to succeed.

No wonder the Thunder are becoming "the team" to model.

Their payroll is about to start getting a bump, but with their success expect it to even out with a corresponding increase in revenue. Their average ticket price of $50 is just barely above the league average of $48.88. 

5. Micky Arison, Miami Heat, 9.08

Why Here?

The Heat have the sixth-highest franchise value at $457 million. That's an eight percent increase from last year, which puts them seventh. They've increased $209 million in value over the last decade, which is 10th best. They had a wins-to-player cost ratio of 193, which was second best. They also made $26 million last year, which ranked fourth best.  

Why Not Higher?

They have 34 percent of their value in debt, which ranks 15th. They also only have $21 per fan, which ranks 19th. 

All in all getting the Big Three sure has been profitable for the Miami Heat. In 2010 they were just worth 364 million. Now they're worth $457 million. The Heat went from a team that lost $5.9 million to a team that made $26 million. That's not bad for a small-market team, right?

That's right; I said small-market. It's funny about how many people talk about the Heat as an example of people leaving small markets for larger markets. Cleveland is the 16th-largest market in the US; Miami is the 17th.

Give credit where it is due. It was smart business to get the Big Three to come to take their talents to South Beach (or just keep them there). 

4. Peter Holt, San Antonio Spurs, 7.83

Why Here?

The Spurs have the ninth-highest value at $418 million. They have only 12 percent of their team caught up in debt, which ranks sixth best. They made $14.4 million, which is ninth best. They have a $49 per fan ratio, which is fifth best. Their wins-to-player cost ratio is 136, which ranks sixth best. 

Why Not Higher?

They only increased by three percent in value last year, which is just 15th best. They have increased by $197 million over the last 10 years, which is only 11th best. That's not bad, but it's not top 10. 

The Spurs are one of the best-run franchises in all of the major sports. Year in, year out, they turn a profit and win. They have been in the black in all but one year over the last decade and they've had a total net profit of around $150 million in that span. 

It is remarkable what this team has achieved considering they are only the 37th-largest media market in the US. From scouting (where they have struck gold on what seems like every pick), to player development to coaching to continuity, this team proves that you don't have to be a major outlet to be big.

3. James Dolan, New York Knicks, 6.92

Why Here?

The Knicks are the second-most valuable franchise at $780 million. They increased 17 percent in value last year, which is third best. They've gone up $388 million over the last 10 years, which is second best. Most remarkably they had a operating income of 74.9 million last year, tops in all of basketball.

They also are one of only two teams (the other being the Clippers) that have no debt. 

Why Not Higher?

The Knicks are only 19th in revenue per fan at $21 and they are 16th in wins-to-player cost ratio at 88.  

The Knicks don't own their stadium. Technically their stadium owns them. The gist of this is that they don't own a ton of money for their stadium.

That's also the owner of the network that carries the games. All of that combined mean that they make a lot of money. If they can make that kind of money by just not being a losing team, what happens if this team actually contends for a title?

When a point guard can go from nobody to international sensation in less than two weeks, it's because he's a Knick. If this team wins the title, then look out. They could become a $1 billion franchise. 

2. Jerry Reinsdorf, Chicago Bulls, 6.67

Why Here?

At $600 million the Bulls have the third-highest franchise value. They increased by 17 percent last year, which is fourth best. They only owe nine percent of their value, which is fifth best. Their operating income of 59.4 million is second best. They are first in wins-to-player cost ratio at 212. 

Why Not Higher?

The only area in which the Bulls were not high is revenue-per-fan ratio. They are tied for 24th in the NBA at $15. It's hard for them to improve on that since they are sold out every night. They also have the second-most local viewers behind the Lakers. Chicago has the largest population of any one team city.

When Jerry Reinsdorf bought the Bulls they cost him just $16 million in 1985. One Greatest of All Time player, six championships and a home-grown MVP later, they are worth $600 million. That's an increase of only $584 million over 27 years. Just think: Michael Jordan's house is up for sale for almost twice what Reinsdorf payed for the Bulls. 

They are probably going to fall behind the Knicks next year though as they aren't going to be able to maintain that hefty 212 player-to-cost ratio. Last year Joakim Noah's new contract hadn't kicked in and next year Derrick Rose's kicks in. 

Additionally as costs go up, the Bulls are probably stepping into luxury tax territory next year as well. Still, $59.4 million is a tidy profit, and staying in title contention is going to help the team to maintain a profit. 

1. Jerry Buss, Philip Anschutz, Los Angeles Lakers, 6.67

Why Here?

The Lakers are the highest-valued team at a hefty $900 million. They increased in value by 40 percent last year, which is also first in the NBA. Their $497 million increase over the last 11 years is also the tops in the NBA. Their operating income was $24.3 million, which was sixth best, and is a good indication why they are worried about salary all of a sudden. 

Why Not Higher?

There is no higher. But they are only 11th in wins-to-player cost ratio and they are 14th in revenue per fan. Like the Bulls and Knicks, it's probably hard to improve on that figure. 

The Lakers are the most successful sports franchise over the last 62 years in all of American sports if you consider profit, value, consistency, winning and so on. In every conceivable manner they are a success story. 

The reason for their recent boon is a new $200 million TV deal. Considering they are by far the most watched team at 271,000 viewers, it's money earned.