SBD/January 28, 2011/Franchises

Forbes' NBA Valuations Up Slightly; Knicks Overtake Lakers At Top

The average value of an NBA franchise is $369M, up 1% from last year, according to Michael Ozanian as part of FORBES' annual valuations. But "several of the league's 30 teams have not fully recovered from the recession, and as a result values are still 2.6% below the $379 million average they hit two years ago." The "bad economy and a few suspect markets (Minnesota, Sacramento, Indiana among others) drained profitability during the 2009-10 season due to lower ticket receipts." Operating income fell to an average of $6.1M, down 22% from last year and the "lowest figure since the 2002-03 season." Additionally, 17 teams "lost money, the most since the lockout-shortened 1998-99 season." Ozanian noted the Knicks replaced the Lakers "as the NBA's most valuable team, worth $655 million, up 12% from last year." Meanwhile, Heat F LeBron James signing with the team and leaving the Cavaliers "accounted for both the biggest gain and drop in team values." The Heat's value increased 17% to $425M, while the Cavaliers' value fell 26% to $355M (FORBES.com, 1/26).

RK
TEAM
VALUE
1-YR
% +/-
DEBT/
VALUE
REVENUE
OPERATING INCOME
1
Knicks
$655M
12%
0%
$226M
$64.0M
2
Lakers
$643M
6%
19%
$214M
$33.4M
3
Bulls
$511M
0%
11%
$169M
$51.3M
4
Celtics
$452M
5%
40%
$151M
$4.2M
5
Rockets
$443M
-6%
16%
$153M
$35.9M
6
Mavericks
$438M
-2%
46%
$146M
-$7.8M
7
Heat
$425M
17%
38%
$124M
-$5.9M
8
Suns
$411M
-4%
45%
$147M
$20.4M
9
Spurs
$404M
1%
10%
$135M
-$4.7M
10
Raptors
$399M
3%
34%
$138M
$25.3M
11
Magic
$385M
6%
29%
$108M
-$23.1M
12
Warriors
$363M
15%
41%
$119M
$14.3M
13
Pistons
$360M
-25%
0%
$147M
$31.8M
14
Trail Blazers
$356M
5%
30%
$127M
$10.7M
15
Cavaliers
$355M
-26%
56%
$161M
$2.6M
16
Jazz
$343M
0%
5%
$121M
-$3.9M
17
76ers
$330M
-4%
23%
$110M
-$1.2M
18
Thunder
$329M
6%
43%
$118M
$22.6M
19
Wizards
$322M
3%
40%
$107M
-$5.2M
20
Nuggets
$316M
-2%
9%
$113M
-$11.7M
21
Nets
$312M
16%
224%
$89M
-$10.2M
22
Clippers
$305M
3%
0%
$102M
$11.0M
23
Hawks
$295M
-4%
63%
$105M
-$7.3M
24
Kings
$293M
-4%
32%
$103M
-$9.8M
25
Bobcats
$281M
1%
53%
$98M
-$20.0M
26
Hornets
$280M
5%
69%
$100M
-$5.9M
27
Pacers
$269M
-4%
56%
$95M
-$16.9M
28
Grizzlies
$266M
4%
56%
$92M
-$2.6M
29
T'Wolves
$264M
-1%
19%
$95M
-$6.7M
30
Bucks
$258M
2%
21%
$92M
-$2.0M

NOT A FAN: In Ft. Worth, Dwain Price notes Mavericks Owner Mark Cuban "doesn't give any credence" to Forbes' rankings. Cuban: "That's just useless. There's nothing useless as evaluation than what Forbes does. It's worthless. It's meaningless and worthless. You can quote me on that." He added, "No one ever looks at buying or selling a franchise based off of Forbes' numbers. You might as well go to a second grader and ask him how high can they count" (FT. WORTH STAR-TELEGRAM, 1/28).

AT THE CENTER OF IT ALL: FORBES' David Whelan notes the Magic lost $23M last year in their final season at Amway Arena, "with $38 million in ticket sales and $70 million in broadcasting and other revenue not fully covering $86 million in payroll compensation and $45 million in other costs." But despite Orlando's "free-falling economy and 12% unemployment rate," the newly opened Amway Center this season is "pulling in $24 per fan visit in addition to the ticket price, 50% more than the team's previous home did." The Amway Center in total this year "will add $30 million in gross revenue from ticket sales, luxury boxes, advertising and improved concessions." Magic Owner the DeVos family during the early part of the decade "wrote a $5 million to $10 million check annually to cover losses," and by last year the team said that the "shortfall reached $40 million." But Whelan writes the "arena is the difference maker, unique in its ability to make fans stay and spend" (FORBES, 2/14 issue).

A TRAIL TO FOLLOW: In Portland, John Canzano noted the Trail Blazers are valued "at $103 million more than" the team was valued in '07. Canzano: "Would we even be talking lockout if the league's financials looked like the Blazers? Because if anything here is clear, it's the operating model that the Blazers have set up is profitable and, also, features a product that is playing above-.500 while others are drowning." The team's numbers were "so strong in Wednesday's valuation that you wonder if the organization shouldn't be more focused on raising payroll some and taking measures to become a true contender now." Canzano wrote he has "always maintained that the Blazers organization's greatest asset wasn't a star player, or the Rose Garden Arena, rather, a forgiving fan base and a monopoly among local sponsors." The Trail Blazers have "only two primary sponsors (Wells Fargo and Comcast) that trade on the major stock exchanges," and the rest of the sponsorship revenue "is coming from regional affiliates or local companies, and it turns out that this has been a healthier business model during a recession" (Portland OREGONIAN, 1/27).
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