NBA Valuations: From $450 Million to $5.2 Billion

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Friends,

Spoiler Alert

When it comes to franchise valuation in professional sports, winning doesn’t always matter — location does.

What am I talking about?

Similar to the annual Forbes report, sports business publication Sportico released their new 2021 NBA franchise valuation report yesterday.

Here are the highlights:

• For the first time in more than two decades, the average NBA franchise valuation declined year-over-year — now worth $2.4 billion, a 2% decline.

• Three franchises—the New York Knicks, Golden State Warriors, and Los Angeles Lakers—are each worth more than $5 billion, which is slightly more than the NFL’s most valuable franchise — the Dallas Cowboys.

• At $5.42 billion, the New York Knicks are the most valuable franchise in the NBA, despite having the league’s worst record since 2000.

The craziest stat?

The fair market value of all 30 NBA teams, including ownership’s stakes in real estate, regional sports networks, and additional team-related holdings, is more than $70 billion.

For context, that’s more than the GDP of countries like Bulgaria, Croatia, and Uruguay.

Here are the top 10 most valuable NBA franchises:

Rather than break down each franchise's valuation individually, we’ll pick just one today — the Golden State Warriors.

Check this out…

When a group led by Joe Lacob and Peter Guber paid an NBA record $450 million for the Golden State Warriors in 2010 — outbidding billionaire Larry Ellison in the process — a majority of the sports world was left scratching their head.

Today, with the Golden State Warriors now worth more than $5.2 billion, no one is laughing.

🤯🤯🤯

What changed?

Everything, really.

After drafting Stephen Curry in 2009, the team started winning — making the playoffs for nine straight years, participating in the NBA Finals five straight times, and winning three world championships in the process.

In this case, winning did matter.

The Warriors now rank among the top of the league in home-game attendance and saw their revenue skyrocket accordingly. At $430 million last year, no team in the NBA brought in more revenue than the Warriors.

Here’s how the Warriors revenue has trended over time:

• 2010 Revenue: $139 million

• 2019 Revenue: $430 million

The best part?

Their financial success afforded them expansion.

In 2019, the Warriors opened the Chase Center — a brand new $500 million arena in downtown San Francisco.

Even better?

Unlike their in-state rival Los Angeles Lakers, the Warriors own, operate, and even act as landlords to corporate partners like Uber on the property.

In total, Sportico values the Warriors’ team-related business and real estate assets at $1.5 billion, which is 50% more than any other NBA franchise.

Ultimately, it would be naive not to mention most other NBA franchises' overall growth rate when discussing the Warriors — they just happened to grow faster.

Here’s an example:

The average NBA franchise valuation has grown from $365 million in 2010 to $2.4 billion today — an increase of 557%.

The Golden State Warriors?

They’ve seen their valuation increase more than 1,000% in the same time period, from $450 million to $5.2 billion.

That’s amazing.

In the end, the Warriors benefited from a unique combination of timing, overall league growth, winning, and real estate.

The interesting part?

With the team projecting an annual revenue target of $800 million in the next decade — slightly less than 2x their current revenue— the Warriors might just be getting started.

Have a great day, and we’ll talk tomorrow.

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Extra Credit

I detail many interesting sports business-related topics via Twitter threads, but there’s nothing better than hearing it from the person themselves.

Last night, Chamath Palihapitiya detailed the story that led him to purchase a 10% stake in the Warriors for $25 million in 2010 — which is now valued north of $520 million.

Check it out. It’s great.

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