L.A. Lakers Top 2012 List Of The NBA's Most Valuable Teams - Forbes

Blockbuster television deals and a new collective bargaining agreement have lifted the value of the average NBA team to a record $393 million, up 6.5% over last year.

No team has benefited more from the explosion in TV money than the Los Angeles Lakers, who have unseated the New York Knicks as the league’s most valuable franchise. The Lakers struck gold last year with a new 20-year television deal with Time Warner Cable worth an average of $200 million annually beginning with the 2012–13 season. The agreement drives the value of the Lakers up an NBA-high 40% to $900 million.

Time Warner will create two new regional sports channels to feature the Lakers, one in English and one in Spanish. The Lakers have by far the biggest TV audience of any NBA club, averaging 271,000 households on Fox Sports West last season, which was 73% higher than the next-most-watched team, the Chicago Bulls.

The NBA’s TV ratings soared nationally and locally last year, jumping more than 50% on regional sports networks for at least eight teams. TNT and Walt Disney‘s ESPN/ABC pay $930 million a year on average for rights to NBA games nationally. All three benefited from the hype surrounding LeBron James’ move to the Miami Heat, with ratings up 45% for games on TNT, 30% on ABC and 29% on ESPN. In an increasingly DVR-saturated environment, media companies will pay up for sports — it’s one of the few programming options left that guarantee a large number of eyeballs for advertisers.

The Golden State Warriors, got a boost from TV as well, fueling a 24% rise in their worth to $450 million. The team kicked off a new deal last season with Comcast SportsNet that paid the Warriors approximately $50 million up front and roughly tripled the annual rights fee to over $25 million from $9 million. The agreement is for 18 years, with provisions to periodically renegotiate along the way (see “Why The Warriors Are The Best Deal In Basketball”).

The Boston Celtics reached a new media rights agreement with Comcast SportsNet New England last summer that extends the current deal between the two sides 20 years through 2038. It gives the team a 20% equity stake in the regional sports network. The new deal more than doubles the team’s local media revenue, which currently is less than $20 million. Celtics games on CSN averaged 116,000 households during the 2010-11 season, fourth-most in the league behind the Lakers (271,000), Bulls (157,000) and Knicks (138,000). The Celtics are worth $482 million, up 7% over last year.

The five-month lockout of players that ultimately cancelled 240 games threatened to torpedo the league’s momentum. Owners and players eventually reached a new collective bargaining agreement in late November that salvaged a condensed 66-game 2011-12 season. The CBA covers 10 years, but either side can opt out of the agreement in 2017.

The deal is more favorable to owners compared to the prior agreement. It cuts the percentage of total league revenues that players receive from 57% to a range of 49% to 51%, which is more in line with what NFL and MLB players get. It will save owners $250 million annually at the start of the agreement. Player contracts are limited to five years with 7.5% annual raises when re-signing with their current team compared to six years and 10.5% previously (contract lengths and raises are smaller for players switching teams).

The league’s big spenders will need to get player costs in order or face a more punitive tax on high payrolls in future seasons. The new luxury tax includes an incremental tax that increases every $5 million above the tax threshold, with further penalties on repeat offenders. The upshot: the Lakers tax bill of $20 million last year would have been $65 million under the new system as a repeat offender. That is on top of their $90 million payroll.

The league’s bottom-feeders get a boost from a new revenue-sharing plan where the amount transferred from high-revenue to low-revenue teams is expected to triple from the current $60 million. A team like the Milwaukee Bucks will collect $16 million annually, up from $6 million which will help stem losses.


Some owners, like the Dallas Mavericks’ Mark Cuban, have questioned whether the increased revenue sharing in the new CBA will be enough for low revenue teams to keep pace with big market teams given the rich media deals secured by Lakers and Warriors. We doubt it. One look at our values shows that the spread between the NBA’s haves and have-nots is only growing. The 15 most valuable NBA teams are worth $485 million on average, up 10%. The value of teams in the bottom half averages $300 million, down 0.4% from last year.

NBA revenues hit a record $4 billion last season, up 4.2% from the prior year. The average NBA team had an operating profit (earnings before interest, taxes, depreciation and amortization) of $5.8 million last year, down 5% from the prior year. That profit is inflated by the top teams as the Lakers, Knicks, Bulls and Heat average $46 million in earnings while the rest of the league had a cumulative loss. Overall, 15 teams lost money, led by the Charlotte Bobcats and Memphis Grizzlies, who both were $25 million in the red.

The Knicks’ value rose 19% to $780 million as they benefited from their first winning record in 10 years. The Knicks sold out season tickets for the first time since the 2001-02 season. The team hiked ticket prices 49% this season to help pay for the $850 million renovation of its home arena, Madison Square Garden. The Knicks were the NBA’s most profitable team with operating income of $75 million.

The Heat are the NBA’s sixth most valuable team, worth $457 million, up 8%. James could not lift the Heat past the Mavericks in the NBA Finals last season, but he did help give the team a huge boost in its local television ratings. The Heat’s average rating on Sun Sports doubled during the 2010-11 season to 4.9, third-best in the league. The Heat’s overall revenues jumped $34 million last season thanks to a sold-out arena each night and 11 home playoff games.

Even with a new CBA and increased revenue sharing, there are still some problem franchises for the NBA. The league bought the New Orleans Hornets from George Shinn at the end of 2010 in a seller-financed deal for $310 million. The league cannot find a buyer for the team and last year the state of Louisiana had to cough up $7 million in subsidies for the Hornets.

The conflict of interest with a league owning a team was on full display in December when the NBA stepped in to overturn a trade that would have sent Hornets point guard Chris Paul to the Lakers amid cries of the rich getting richer. Paul was eventually sent to L.A. in a trade, but to the Clippers instead. We value the Hornets at $285 million.

The Atlanta Hawks are in search of a buyer after a deal fell apart in November for Los Angeles businessman Alex Meruelo to buy the team. The Hawks have made the second round of the playoffs for three straight years, yet ratings for Hawks games fell 39% on SportSouth last year and the team lost $15 million. The Hawks are worth $270 million, down 8%.

One former high-flyer on the decline is the Cleveland Cavaliers, who floundered last year, setting an NBA record with 26 consecutive losses. TV ratings for games on Fox Sports Ohio were off an NBA-worst 54%. Yet the Cavs turned their biggest profit ever last season in their first year after James departed for South Beach. They earned $33 million in operating income, third best in the NBA. Credit a $30 million payroll cut and no luxury tax, which cost the team $16 million in 2010.

The Cavs had the NBA’s third-highest paid attendance (20,112 a game) as most season tickets were sold before James bolted. Things do not look as bright this year as attendance is down 4,000 fans a game to 16,149, which ranks 17th in the league. The value of the Cavs is down 7% to $326 million after a 26% drop last year.

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