NBA audiences on ESPN/ABC and TNT have fallen sharply again at the start of the season, but Adam Silver is not worried… and neither are investors. Like Forbes, Sportico publishes its ranking of the valuation of franchises, with Golden State Warriors which exceed 9 billion dollars!
The value of the Bay franchise has increased by another 10% in one year, while we find behind the New York Knicks (8.3 billion, +12%), the Los Angeles Lakers (8.1 billion, +10%) then the Brooklyn Nets (5.7 billion, +43%), the Los Angeles Clippers (5.7 billion, +25%) and the Boston Celtics (5.7 billion, +11%).
TV revenues further boosted
Obviously, the first factor explaining this increase is the new TV contract negotiated by the NBA, which will begin in the 2025/26 season. A 76 billion dollar TV contract which will bring even more guaranteed money to clubs. This year, the teams will each receive a little more than $100 million in relation to national television broadcast rights. It will be $137 million next season, and it will gradually increase, until it reaches $296 million in 2035/36!
Moreover, Sportico makes an interesting classification, with the valuation/revenue ratio by league.
With an average value of its franchises of $4 billion, and average annual revenues of $362 million, the NBA dominates this ranking (11.9), ahead of MLS franchises (9.6). It is only behind that we find the franchises of NFL (9.3), NHL (7.7) then WNBA (7.3) or even MLB (6.7).
Sportico also includes in this ranking the 30 largest football clubs (Real Madrid, Manchester United, FC Barcelona, etc.) which do not play in MLS, with an average valuation of 2.2 billion dollars, for annual revenues of 432 million dollars. That’s a ratio of “only” 5.0 for these football giants.
Precious rooms… and a global sport
But how can we explain that investors value NBA franchises so much, when they generate less money than clubs in other leagues, such as the NFL or MLB?
Several factors: the first is that NBA franchises that own their arenas can generate revenue differently, especially with concerts on non-match days. Madison Square Garden (Knicks), Barclays Center (Nets), TD Garden (Celtics), United Center (Bulls), State Farm Arena (Hawks), Scotiabank Arena (Raptors), Capital One Arena ( Wizards) and many other NBA venues host many other events during the year, which diversifies the revenue stream. Obviously, this is a huge advantage compared to the stadiums of NFL or MLB franchises, which can only be used for American football and baseball.
The second point is that investors think that NBA franchises are the only ones (perhaps with those of MLS) to be able to benefit from the advantageous (and guaranteed) economic environment of American closed leagues, while being able to benefit from international exposure, basketball being an “exportable” sport.
Because even if NFL franchises are very powerful in the American market, NBA franchises can potentially reach more consumers, in China, Europe and everywhere else in the world.
