NEW YORK: Forbes, the reputed business magazine, has claimed that for the first time in history, all NBA teams barring the Cleveland Cavaliers have been profitable courtesy social media interactions, global expansion, renewed TV rights deals and new revenue generating opportunities from shifting home bases.
The average earnings before interest, taxes, depreciation and amortization, or EBITDA, of $61 million per NBA team is double what it was two seasons ago. Teams have benefited from pro basketball’s $24 billion TV contract with TNT and ESPN, which kicked off in the 2016-17 season and is shared equally among the 30 teams. Another boost came in the form of the collective-bargaining agreement signed in late 2011. It cut the percentage of basketball-related income going to the players from 57% to 51%.
The total amount of revenue earned by the league overall has reached $8 billion last season, which is an 8.5% rise. In addition to the gains from TV and arena renovations, teams reaped the rewards of the NBA’s logo patch sponsorships. The three-year trial program started with the 2017-18 season, and every team except the Oklahoma City Thunder has a deal in place, at an annual rate of between $4 million and $20 million.
In addition to being the lone team to lose money, the Cavaliers were the only one that declined in value. The team is worth $1.28 billion, down 4% from last year.
The average NBA team is worth $1.9 billion in valuation, up 13% over last year and three times the level of five years ago.
In a major surprise, the New York Knicks is the most valued team of the league as of 2017-18, being pegged at a whopping $4 billion. This makes Knicks the most second expensive sporting property in the USA after the $5 billion worth Dallas Cowboys in the NFL.
The Knicks’ $1 billion renovation of Madison Square Garden, which was completed in 2013, produced new revenue opportunities. Despite nearly two decades of losing, the Knicks continue to command premium prices for tickets, suites and sponsorships. The team’s local cable deal with MSG, worth more than $100 million a year, is the second richest in the sport behind that of the Los Angeles Lakers.
Over the last 5 years, the Golden State Warriors have been growing the most in terms of valuation, at a whopping 367%. The defending champions’ current value stands at $3.5 billion, which is the third highest for the 2017-18 season, behind the Knicks and Los Angeles Lakers ($3.7 billion).
Investors sniffing around the NBA salivate at the league’s international prospects, with 300 million basketball players in China and annual revenue growing outside the U.S. at a rate in the high teens.
The sport’s global popularity expands the investor pool as well. Alibaba co-founder Joe Tsai’s investment in the Brooklyn Nets last year, when he purchased a 49% stake gives him the opportunity for obtaining majority control of the team in two years and has valued the Nets at a record $2.3 billion.
