What Do Soaring NBA Franchise Values Tell Us About MLB?
News broke Sunday night that the Maloofs — the majority owners of the National Basketball Association’s Sacramento Kings — agreed to sell their share of the team to Seattle investors, including Microsoft CEO Steve Ballmer and investor Chris Hansen. The Seattle group valued the franchise at $525 million, and agreed to pay $340 million for the Maloof family’s 65% stake. Sacramento mayor and former NBA star Kevin Johnson is working to assemble a counter-bid to keep the team in California while minority investors may sue and claim a breach of the limited-partnership agreement. In other words, the $525 million value is likely to go up before this is done.
Just days later, Forbes published its annual story on NBA franchise values, and ranked the Kings as the 11th-most-valuable franchise, using the $525 million figure from the proposed sale. But the Kings weren’t the only NBA team to see its value rise significantly in the past year. For the first time, Forbes valued two teams at $1 billion or more — the New York Knicks (at $1.1 billion) and the Los Angeles Lakers (at $1 billion) — and pegged the average franchise value at $509 million, a 30% increase over 2012. Forbes also reported the average operating income (earnings before taxes, depreciation, etc) for the NBA’s 30 teams was $11.9 million, the highest since Forbes started tracking the numbers in 1998.
So what’s driving the NBA’s financial success, and what does it foretell for Major League Baseball teams’ values when Forbes releases that list in March?