NBA Franchise Values

DenverSooner said:
http://finance.yahoo.com/news/heres-much-every-nba-team-200108041.html

Check this out. It adjusts the Forbes value for NBA franchises based on the Clipper's sale. It says the Clippers have a $15,000,000 annual operating income. If I am doing the math correctly, 15,000,000/2,000,000,000 is the same as a .0075% annual return.
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that doesn't speak to a coule of things .. 1 .. new national tv deal in a couple of years that will tripple (or more) in value ..

2. Lakers now get 200 mil a year in local tv money .. clippers won't get that but they will make over 100 mil a year with the new deal they will get in less than 2 years ..

so clippers annual return will be well over 100 mil dollars .. so over 5% ..
 
Exactly boulder. And that Lakers deal is for 20 years. It's safe to assume Ballmer will be able to sign a long term local TV deal that easily exceeds his purchase price.

And let's not forget this is all chump change to him anyway. His $20 billion in Microsoft stock pays a 2.77% dividend yielding him over $500 million per year.

It's going to be interesting to watch the players reaction to all of this. They were totally hosed in the last labor deal which exploded the luxury tax to keep a lid on salaries & resulted in soaring franchise values.
 
bocabull said:
Exactly boulder. And that Lakers deal is for 20 years. It's safe to assume Ballmer will be able to sign a long term local TV deal that easily exceeds his purchase price.

And let's not forget this is all chump change to him anyway. His $20 billion in Microsoft stock pays a 2.77% dividend yielding him over $500 million per year.

It's going to be interesting to watch the players reaction to all of this. They were totally hosed in the last labor deal which exploded the luxury tax to keep a lid on salaries & resulted in soaring franchise values.
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What do you do for a living?
 
bocabull said:
Exactly boulder. And that Lakers deal is for 20 years. It's safe to assume Ballmer will be able to sign a long term local TV deal that easily exceeds his purchase price.

And let's not forget this is all chump change to him anyway. His $20 billion in Microsoft stock pays a 2.77% dividend yielding him over $500 million per year.

It's going to be interesting to watch the players reaction to all of this. They were totally hosed in the last labor deal which exploded the luxury tax to keep a lid on salaries & resulted in soaring franchise values.
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I thought some of their reactions were over the top and displayed a misunderstanding of valuation and revenues.
 
campbest said:
I thought some of their reactions were over the top and displayed a misunderstanding of valuation and revenues.
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Is there anything more anti american than a maximum wage? That's what the salary cap is. And even worse the maximum wage calculation in the NBA is based on average revenue. How would you like to be limited to a maximum wage based on the most mediocre competitors results?

But the main point is that anybody who needs to turn an annual profit is not wealthy enough to own a pro sports franchise. The payday is in asset appreciation, the capital gain at the end of the rainbow, not annual income.
 
bocabull said:
Is there anything more anti american than a maximum wage? That's what the salary cap is. And even worse the maximum wage calculation in the NBA is based on average revenue. How would you like to be limited to a maximum wage based on the most mediocre competitors results?

But the main point is that anybody who needs to turn an annual profit is not wealthy enough to own a pro sports franchise. The payday is in asset appreciation, the capital gain at the end of the rainbow, not annual income.
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A cap is needed for some sort of competitive balance, the "maximum wage" is a byproduct. You can't set a cap based on enterprise value or a Forbes ranking...they would fluctuate too much. Forbes quoted LAC at $875k, but it sold for $2B. Are the players cool with being paid considerably less if the value of the franchise crashes? Doubt it.

Agree that the big payday is in asset appreciation, but you still have to operate the franchise. A number of the players could take a note from this appreciation by investing in their own money in smarter assets instead of terrible restaurants, hip-hop labels and their best friend's business idea.
 
DenverSooner said:
I was wondering if you were an agent or involved in sports because you seem pretty passionate about players salary.
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I consider athletic ability the same as intellectual property. The inventor of the IP or the person with the ability is who creates the value and should benefit the most. Pro sports owners create little if any value. The city provides the infrastructure and fan base, the players and coaches provide the product.

American is the economic power of the world because people who create value get rewarded. People who exploit get regulated. That creates an ecosystem of innovation.
 
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creating the league and owning the team (creating the business) has always been the biggest risk ..and thus is rewarded ..
 
BoulderSooner said:
creating the league and owning the team (creating the business) has always been the biggest risk ..and thus is rewarded ..
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Please point me to which current owner had anything to do with creating the NBA. The salary cap removes all risk while exploding the reward exponentially. The players? They took a pay cut. It's all good. These new luxury cap rules are gone soon. The players can opt out in 2017 and that's a guaranteed lock. Great news for Westbrook and Durant who will be hitting free agency around then. Not telling how big their contracts will be.
 
bocabull said:
Please point me to which current owner had anything to do with creating the NBA. The salary cap removes all risk while exploding the reward exponentially. The players? They took a pay cut. It's all good. These new luxury cap rules are gone soon. The players can opt out in 2017 and that's a guaranteed lock. Great news for Westbrook and Durant who will be hitting free agency around then. Not telling how big their contracts will be.
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Did Dr. Buss? I think he recently died.
 
bocabull said:
Please point me to which current owner had anything to do with creating the NBA. The salary cap removes all risk while exploding the reward exponentially. The players? They took a pay cut. It's all good. These new luxury cap rules are gone soon. The players can opt out in 2017 and that's a guaranteed lock. Great news for Westbrook and Durant who will be hitting free agency around then. Not telling how big their contracts will be.
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There was risk for the Thunder owners. They purchased the team and moved it to OKC. It could have struggled in OKC.

I also think the cap helps keep the league competitive by allowing smaller market teams to compete. Should all sports be like baseball where the Yankees out spend everyone and win about 25% of the championships?

Certainly you could argue baseball works fine but I think a salary cap makes sense. I don't like that New York is so dominant in baseball. I like that the Spurs, Thunder and Grizzlies can compete.
 
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