SBD/Issue 57/Franchises

Knicks Once Again Top Forbes' List Of NBA Franchise Valuations

The average value of an NBA franchise rose 2% this year to a record $379M, and the Knicks once again top the list with an estimated value of $613M, according to Badenhausen & Ozanian of FORBES. League-wide revenues hit a record $3.8B during the '07-08 season, up 6% from the previous year, and the average NBA team posted a profit, in the sense of "earnings before interest, taxes, depreciation and amortization," of $10.6M, the highest amount since the magazine started analyzing NBA franchise valuations 10 years ago. The Trail Blazers saw the biggest increase in value, up 21% to $307M, while two other teams, the world champion Celtics and the Thunder, which relocated to Oklahoma City from Seattle this summer, also saw double-digit gains. However, the overall current economic climate will "make this year much more difficult for the NBA," and teams that play in "single sport arenas are particularly vulnerable." For instance, Bobcats Owner Bob Johnson paid $300M for the franchise in '03, but the team now has an estimated value of $284M, second-lowest in the NBA. The following presents Forbes’ NBA franchise values for '08 (FORBES.com, 12/3).

RK
TEAM
VALUE
1-YR
% +/-
DEBT/
VALUE
REVENUE
OPERATING INCOME
1
Knicks
$613M
1%
0%
$208M
$29.6M
2
Lakers
$584M
4%
22%
$191M
$47.9M
3
Bulls
$504M
1%
11%
$165M
$55.4M
4
Pistons
$480M
1%
0%
$160M
$40.4M
5
Cavaliers
$477M
5%
42%
$159M
$13.1M
6
Rockets
$469M
1%
15%
$156M
$31.2M
7
Mavericks
$466M
1%
26%
$153M
$13.6M
8
Suns
$452M
1%
39%
$148M
$28.9M
9
Celtics
$447M
14%
40%
$149M
$20.1M
10
Spurs
$415M
3%
13%
$138M
$19.0M
11
Raptors
$400M
7%
40%
$138M
$27.7M
12
Heat
$393M
-6%
43%
$131M
$1.1M
13
76ers
$360M
-5%
18%
$116M
$0.3M
14
Jazz
$358M
5%
3%
$119M
$8.8M
15
Wizards
$353M
2%
47%
$118M
$14.9M
16
Kings
$350M
-9%
24%
$117M
$7.0M
17
Magic
$349M
8%
29%
$100M
$6.2M
18
Warriors
$335M
8%
22%
$112M
$14.2M
19
Nuggets
$329M
3%
14%
$112M
$26.3M
20
Trail Blazers
$307M
21%
34%
$114M
$0.9M
21
Hawks
$306M
7%
23%
$102M
$6.7M
22
Pacers
$303M
-9%
16%
$101M
$6.5M
23
T'Wolves
$301M
-2%
17%
$100M
$5.7M
24
Thunder
$300M
12%
47%
$82M
$9.4M
25
Clippers
$297M
1%
0%
$99M
$10.7M
26
Nets
$295M
-13%
71%
$98M
$0.9M
27
Grizzlies
$294M
-3%
51%
$95M
$3.2M
28
Hornets
$285M
5%
35%
$95M
$3.2M
29
Bobcats
$284M
-1%
53%
$95M
$4.9M
30
Bucks
$278M
5%
20%
$94M
$5.4M

IT PAYS TO LOSE? In N.Y., Larry McShane noted the Knicks top Forbes’ list for the fourth straight season, despite not having won a playoff game since ’01. Forbes Senior Editor Kurt Badenhausen said, “In spite of the Knicks’ terrible play on the court in recent years, the franchise is the NBA’s most valuable thanks to the pricey luxury suites and ticket packages that fans and companies continue to snap up at Madison Square Garden” (N.Y. DAILY NEWS, 12/4). TRUEHOOP's Henry Abbott wrote the "effect of market-size is undeniable" in the rankings. Most would agree that the Knicks could "hardly have been managed more poorly over the last few years, yet the New York team remains the most valuable" (ESPN.com, 12/4).

GAINING GROUND: The Cavaliers' value of $477M places them fifth on the list, which is the team's highest-ever ranking and is up 5% from last year, when the Cavaliers were ranked No. 7 with an estimated value of $455M. However, Forbes estimated the Cavaliers' operating income at $13.1M, which is the lowest since Owner Dan Gilbert purchased the franchise from Gordon Gund in '05 (Cleveland PLAIN DEALER, 12/4).

SHOOTING TOO LOW? Celtics CEO & Managing Partner Wyc Grousbeck said of the valuations, "I am pretty sure none of those teams would be for sale at those prices. The upward trend is correct but the valuations are low." Grousbeck added the sports sector "generally has held up well by comparison to other parts of the economy" (BOSTON GLOBE, 12/4).

LEADERS OF THE PACK: FORBES also released a list of the best NBA franchise owners, which is topped by Rockets Owner Les Alexander. The Rockets in the past six years have increased revenue from $80M to $156M, "helping grow the club's valuation" from $278M in '03 to $469M this year, "all while playing in a mid-sized market that falls in the NBA's bottom third in median income." The club also has recorded just two losing seasons since Alexander purchased the club in '93. The following presents Forbes list of the Top 10 NBA franchise owners (FORBES.com, 12/3).

RK
OWNER
1
Rockets Owner Leslie Alexander
2
Spurs Owner Peter Holt
3
Pistons Owner Bill Davidson
4
Heat Owner Micky Arison
5
Jazz Owner Larry Miller
6
Celtics CEO & Managing Partner Wyc Grousbeck
7
Hornets Owner George Shinn
8
Magic Owner Rich DeVos
9
Nuggets Owner Stan Kroenke
10
Grizzlies Owner Michael Heisley
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