The Average NBA Team Is Now Worth $2.6 Billion
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Hey Friends,
NBA franchise valuations continue to increase in value by the day.
The New York Knicks are still the NBA’s most valuable franchise, worth $6.12 billion according to Sportico’s 2021 list, and sit just ahead of the Golden State Warriors ($6.03 billion), the Los Angeles Lakers ($5.63 billion), and the Brooklyn Nets ($3.61 billion).
Top 10 Most Valuable NBA Franchises
New York Knicks: $6.12 billion
Golden State Warriors: $6.03 billion
Los Angeles Lakers: $5.63 billion
Brooklyn Nets: $3.61 billion
Chicago Bulls: $3.53 billion
Boston Celtics: $3.44 billion
Los Angeles Clippers: $3.16 billion
Houston Rockets: $2.79 billion
Toronto Raptors: $2.74 billion
Dallas Mavericks: $2.72 billion
The average NBA franchise is now worth $2.6 billion, trailing the National Football League (NFL), but comfortably ahead of Major League Baseball (MLB), the National Hockey League (NHL), and Major League Soccer (MLS).
Average Franchise Valuation By League
NFL: $3.5 billion
NBA: $2.6 billion
MLB: $2.2 billion
NHL: $930 million
MLS: $550 million
This makes sense, of course. These leagues all have revenue-sharing agreements with their respective teams, and given the National Football League will bring in over $15 billion in revenue this year, compared to $8 billion to $10 billion for the NBA & MLB, it’s no surprise that NFL teams are some of the most valuable sports assets in the world today.
But I believe the story is much more about the continuous increase in team valuations.
For example, the LA Clippers, Atlanta Hawks, Phoenix Suns, Golden State Warriors, and Indiana Pacers saw valuation increases between 15% and 20% last year. The average NFL team increased 14% year-over-year, and North America now has two teams, the Dallas Cowboys & New York Yankees, closing in on a $7 billion valuation.
Keep in mind, this all happened during a global pandemic that has lasted nearly two years, kept millions of fans away from stadiums, arenas, and ballparks, and cost professional sports leagues more than $10 billion combined in lost revenue.
This is all possible through the tailwinds that we have been discussing for months.
The NBA, NHL, MLS, and other major sports leagues have already put policies in place that enable institutional investors like multi-billion-dollar private equity firms to acquire minority equity stakes in multiple franchises throughout their leagues.
We’ve seen that investment trend accelerate throughout the year, and my guess is that it is just getting started. These assets are scarce. They have a strong & unique combination of top-line revenue growth, brand loyalty, diversification, tax advantages and aren’t showing any signs of slowing down, even in the face of a once-in-a-generation global pandemic.
The expansion of investor demand through private equity eligibility on an asset with constrained supply tells you that prices should continue to increase over time.
But that’s not the only strong tailwind propelling pro sports valuations higher.
Sure, Amazon is paying $1 billion annually for exclusive rights to NFL’s Thursday Night Football, but we really haven’t even scratched the surface on streaming.
As cable companies continue to lose millions of customers each year, they will increasingly allocate a more significant percentage of their budget towards live sports rights. Why? Because live sports rights are the crutch that holds up the entire cable bundle.
There is nuance to this, of course. For example, most of these major professional sports leagues recently signed massive new media deals, and inflation is currently at its highest level in roughly 40 years.
Still, you can’t dispute the numbers. Team valuations across professional sports continue to increase, and as categories like sports betting & streaming become more significant from a revenue perspective, institutional investors are betting that valuation increases won’t be stopping anytime soon.
I hope everyone has a great day, and we’ll talk tomorrow.
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