Things have not been going well for fans of the New York Knicks recently to say the least. Already locked into their sixth straight losing season — their 16th in the last 18 campaigns — the Knicks also traded away their first home-grown superstar in decades with the hope of solving their issues through free agency.
But things are doing very well for Knicks owner James Dolan, all things considered. His franchise remained the most highly-valued in the league, according to Forbes, and is the first in the NBA to cross the $4 billion mark.
With a valuation that equals the New York Yankees, the Knicks now only trail the Dallas Cowboys ($5 billion) as the most valuable American sports franchise. The product on the court may not be great (yet), but Dolan’s billion-dollar renovation to Madison Square Garden is paying off, and the league’s second-biggest local cable deal helps the Knicks continue to print money.
On Wednesday, Forbes released its annual valuation of the league’s 30 franchises with each team reaching at least $1 billion for just the second time. The average team is worth $1.9 billion, which is up 13 percent from last year and up 200 percent from five years ago. Every team improved from last season with the exception of the Cleveland Cavaliers, which, of course, lost LeBron James to the Los Angeles Lakers.
The league’s exploding revenues have largely been goosed by large TV deals. TNT and ESPN’s $24 billion TV deal is split evenly between the teams, and Forbes reports that teams received more than $110 million last season from various shared revenues such as sponsorships, licensing and national media.
What are the most valuable teams in the league?
Not much has changed among the top-10 most valuable franchises. In fact, the teams are all the same, with the only change being the Dallas Mavericks leaping the Los Angeles Clippers from ninth to eighth.
However, that’s in part because the the lower-valued franchises are much more tightly bunched in value than the top franchises. Although nearly $2 billion separates the nine highest-valued teams, just $550 million separates the 10th-ranked Miami Heat from the 30th-ranked Memphis Grizzlies.
Here is a rundown of the top-10 franchises by value, with the full list available on Forbes:
1. New York Knicks: $4 billion
2. Los Angeles Lakers: $3.7 billion
3. Golden State Warriors: $3.5 billion
4. Chicago Bulls: $2.9 billion
5. Boston Celtics: $2.8 billion
6. Brooklyn Nets: $2.35 billion
7. Houston Rockets: $2.3 billion
8. Dallas Mavericks: $2.25 billion
9. Los Angeles Clippers: $2.2 billion
10. Miami Heat: $1.75 billion
Which teams increased in value the most?
No team improved its valuation more than the Philadelphia 76ers. For the second straight year, the Sixers led the league by improving by at least 40 percent, which has led to their franchise’s value doubling in just two years. Trust The Process indeed.
Here is the top 10 for team valuation improvement by percent with the full list, again, available at Forbes:
1. Philadelphia 76ers: +40 percent
2. Milwaukee Bucks: +26 percent
3. Portland Trail Blazers: +23 percent
4. New Orleans Pelicans: +22 percent
5. Denver Nuggets: +22 percent
6. Toronto Raptors: +20 percent
7. Charlotte Hornets: +19 percent
8. Minnesota Timberwolves: +19 percent
9. Indiana Pacers: +19 percent
10. Utah Jazz: +19 percent
There are several reasons for why teams improve in value so much. For starters, the less a team is valued, the easier it is for it to rise in value as a percentage, which is why seven of the 10 most improved teams are currently among the 12 lowest in value.
However, those key television deals are also major drivers of revenue. The Trail Blazers and Hornets both started new television deals last season that more than doubled in size, while the Bucks began a new TV deal and opened a new arena at the start of this season.
Of course, sustained playoff success also adds value. The Sixers have turned from perennial losers to championship contenders, and eight of the 10 most improved teams made the postseason last year.
What do these valuations mean?
Franchises often sell above their Forbes valuation, although that is in part due to the Winner’s Curse. The highest-valued team in Forbes’ 2014 list was the Knicks at $1.4 billion, and the Clippers were not even in the top 10, but they were sold to Steve Ballmer later that year for $2 billion.
More recently, the Rockets were valued by Forbes at $1.65 billion in 2017, and they were sold in about six weeks for $2.2 billion to Tilman Fertitta. There are plenty of billionaires who do not own pro sports teams and only 123 available in the Big 4 sports, so demand will remain high as long as teams remain very profitable. Teams grow in value faster than the stock market, and competitive rich people love having a team they can truly call their own.
Clearly the NBA is very healthy, as Forbes reports average earnings of $61 million per team before interest, taxes, depreciation and amortization — more than double what is was two years ago. Owners may continue to ask for public money for stadiums, but they are better off than they have ever been.