Last month, Mark Cuban shocked NBA fans with news he was selling the Dallas Mavericks after 24 years in which he transformed the franchise from laughingstock to the second-best record in basketball during his tenure. The $3.5 billion price tag also surprised some observers, who viewed it as modest during a period of ever-escalating record sale prices.
Welcome to 2023, where buying an NBA team for 10 times revenue is deemed a bargain.
Sportico spoke with more than 30 team executives, owners, investors, bankers, consultants and lawyers to unpack the busiest time for NBA team transactions in 13 years. The average team is worth $4 billion, up 33% from last year and 70% from Sportico’s initial NBA valuations three years ago. During that time, the “get-in” price for a team has more than doubled to $2.72 billion (New Orleans Pelicans). The biggest gains this year are at the bottom of the financial table, similar to the NFL, where the least valuable team (Cincinnati Bengals) is worth $4 billion.
National media deals, international opportunities, scarcity and an equal 1/30th stake in the league are boosting values in every NBA market.
The Golden State Warriors ($8.28 billion), New York Knicks ($7.43 billion) and Los Angeles Lakers ($7.34 billion) are in a class by themselves, with the Lakers worth 44% more than the fourth-ranked Boston Celtics ($5.12 billion). At $9.2 billion, the Dallas Cowboys are the only sports team in the world worth more than the Warriors, Knicks and Lakers, with the New York Yankees rounding out the top five.
Our valuation estimates measure a control sale price, instead of a limited partnership transaction. Collectively, the NBA’s 30 teams are worth $120 billion, including team-related businesses and real estate held by owners.
Click for a ranking of all 30 teams or a data visualization comparing the teams.
Hot M&A Market
The Mavericks sale could be approved by the end of December, which would mark the fourth NBA team to trade in 2023. The last time more than two teams sold in a single year was 2012, whih ended a three-year stretch when nine teams were sold. Those teams sold for a tick more than three times revenue on average. For comparison, the quartet in 2023 were valued at an average of 11 times revenue and each deal was structured differently.
Cuban will retain a roughly 25% ownership stake, with the Adelson and Dumont families buying the remainder of the franchise. Miriam Adelson is the widow of casino titan Sheldon Adelson and has a net worth of $33 billion, according to Bloomberg. She is the 25th richest person in the U.S. and would rank third among sports team owners after Steve Ballmer ($128 billion) and Rob Walton ($68 billion). Patrick Dumont is Miriam’s son-in-law and the president at the publicly traded Las Vegas Sands Corp., which represents the bulk of the family’s wealth. Dumont is expected to be the team’s governor with Cuban serving as alternative governor.
Cuban’s discussions with the Adelson family started more than a year ago, according to two people familiar with the negotiation. A fully marketed deal would have almost certainly fetched a premium to the agreed price; Sportico values the Mavericks at $4.03 billion, No. 11 in the NBA. “I think a new arena, real estate area and hopefully a future resort casino can replace what we lose in media, and fund current and future Mavs,” Cuban told Dallas TV reporter Jonah Javad in an email. If Texas approves sports betting, a partnership with the deep-pocketed Adelson family is the clearest path to a new arena with a casino and would likely more than make up for any money Cuban left on the table in selling control of the Mavs.
Jimmy and Dee Haslam bought Marc Lasry’s 25% stake in the Milwaukee Bucks at a $3.2 billion valuation. Limited partner stakes usually don’t carry many rights, but the original Bucks agreement between Lasry and Wes Edens called for them to rotate as the team’s governor every five years. Edens sold his stake near the end of his recent tenure as governor, which featured an NBA title; the governorship right transferred to the Haslams under the deal.
In July, a group led by Rick Schnall and Gabe Plotkin bought the Charlotte Hornets. Plotkin had a right of first refusal, or ROFR, as part of his minority stake investment in the club in 2019. The ROFR kept the team from a full auction, and the final deal at a $3 billion valuation included some seller financing.
Dyal HomeCourt, a fund dedicated to investing in NBA teams, was included in the new Charlotte group. Like fellow institutional investors Arctos Sports Partners and Sixth Street in the NBA, the Dyal Capital-managed firm is focused solely on its financial returns and not the intangible perks that come with sports team ownership. Dyal also has stakes in the Sacramento Kings and Atlanta Hawks, while Arctos is invested in four teams and Sixth Street owns a 20% share of the San Antonio Spurs.
Mat Ishbia’s deal to buy the Suns and WNBA’s Phoenix Mercury was approved in February. The $4 billion price tag was the richest ever for an NBA team and was likely helped by Ishbia’s ability to gain control of the team by only purchasing Robert Sarver’s 37% stake; his group ultimately acquired more than 55% of the club.
The United Wholesale Mortgage CEO doesn’t see it as an overpay. During an interview two months ago focused on his teams’ new $100 million headquarters and practice facility for the Mercury, he told Sportico he has interested parties ready to invest in the team at a higher valuation.
The Suns rank as the 12th most valuable NBA team, but Ishbia expects that to change. “We’re building an elite franchise,” he said. “One day you'll put us at the top of the (team valuations) list, because you'll see what we've done here in Phoenix, and how we're building this organization out from the top to the bottom and everywhere in between.”
Golden Warriors
The Denver Nuggets are the reigning NBA champions, and the Celtics are currently the betting favorite to win the 2024 NBA Finals, but the team to beat in the financial standings remains the Warriors for the third straight year.
The Dubs are the new kids on the block among the bluebloods that make up the rest of the world’s five most valuable sports franchises. A new arena and four titles in eight years have goosed their business model to the point where they top the league in almost every revenue category outside of local media; they have led the NBA in TV ratings seven of the past eight years, but their RSN deal sits in the second quartile of clubs, which provides less exposure risk in the quickly evolving TV landscape.
Total revenue is up seven-fold since Joe Lacob and Peter Guber built an ownership group that paid $450 million for the team in 2010. Last season’s revenue was 37% higher than that of the Lakers, net of revenue sharing. A falloff from competing for annual titles as the Warriors’ stars age shouldn’t dent their regular season finances, due to their $3 billion in contractually obligated revenues tied to Chase Center.
The Warriors have 37 sponsors that spend at least $1 million a year, and those partners benefit from the largest social media following among North American sports franchises. Japanese e-commerce giant Rakuten has the biggest deal, with its jersey patch renewal worth an estimated $45 million per season. The average Warriors sponsorship deal is roughly nine years, while suite leases typically run 10 years.
Golden State’s sky-high value benefits from its multi-use development around Chase Center, and the team has expanded its related businesses with a new entertainment division launched last year—Golden State Entertainment—and landing a WNBA expansion franchise in 2023 that will begin play in 2025.
The Warriors’ neighbor to the north in Sacramento has been on the opposite on-court trajectory, having missed the playoffs an NBA-record 16 straight years before ending the drought in 2023. Yet, during this time, the Kings built a thriving mixed-used development project around Golden 1 Center and maintained a passionate fan base as the only major sports franchise in the metro.
“We have never let the outcome on the court be an excuse for the outcome of the business,” John Rinehart, Kings president of business operations, said in a phone interview. The on-court tide turned last year with the team’s first division title in two decades. “Light the beam” became a rallying cry for fans with the introduction of a victory beam outside the arena. Sponsorship and ticket revenue gains pushed overall revenue into the top 12 in the league, while the club’s net promotor score, which measures customer loyalty, finished in the top five in the NBA.
The Kings have a unique concession situation, with 90% of food and beverage (F&B) served in the arena coming from within 150 miles of the building, fitting for a city known as America’s “farm-to-fork” capital. The program and the team’s success helped the Kings nearly lead the NBA in F&B spending per fan last season, just a few cents behind the Warriors.
The Golden 1 Center hosts 150 ticketed events a year and hundreds more private and community events. It ranked fourth for the first half of 2023 for tickets sold at U.S. arenas, according to Billboard, and the Kings capture the upside since they operate the building. The value of the franchise is up 49% to $3.46 billion and ranks No. 14 overall.
The Utah Jazz are another NBA market that has had a stranglehold on their local pro sports market, dented only slightly by the launch of MLS and NWSL teams. “We have a 40-year head start on other franchises,” Chris Barney, Jazz chief commercial officer, said in a phone interview. “There is equity that builds over time and that puts us in an advantageous position.”
Part of the indoctrination of residents into Jazz fans is created by the Junior Jazz program, which is the largest youth basketball league in the NBA with more than 60,000 players.
This year, the club revived one aspect of its 1990s glory years with the Delta name back on the arena for the first time since 2006 under a long-term partnership. It continues a run of sponsorship deals with new pacts during the past year for its jersey patch, pouring rights and ticketing. When Ryan Smith bought the Jazz for $1.66 billion in 2020, the club ranked No. 29 for sponsorship revenue, but its rank jumped to No. 7 by the end of last season, according to Barney. The number of seven-figure partners rose from six in 2019-20 to its current 24. Overall, Utah’s sponsorship revenue is up 300% during the past three years.
Barney says they have reinvented the assets they have sold and tried to leverage different technology into the partnerships. Another change: No more pitch decks in boardrooms. The majority of deals are now pitched on the arena floor, creating a “highly immersive, highly interactive experience.”
TV Dial
Ticket, sponsorship, premium seating and non-NBA event revenue has bounced back strongly from COVID-19 restrictions. The 30 teams generated $10.9 billion last season, up 8% from the previous year, and will likely jump at least 10% this year. But the major area of concern is on the local TV side, which represented 12% of team revenue last season. Half the league is facing the loss of its regional sports network deal at the end of the season under an agreement struck between the league and Bally Sports parent Diamond Sports Group. The plan also includes a 20% cut to the $600 million 2023-24 rights fee bill for those teams, and still needs approval from the bankruptcy court.
NBA teams have been dialing up the Jazz to check in on their TV situation. In June, the club announced plans to air games on over-the-air channel KJZZ after years on the local AT&T SportsNet RSN option that was worth roughly $25 million per year—Ishbia’s Suns also jumped to the free TV model. The Jazz at the same time have launched a streaming service that is priced at $125.50 a year and has racked up more than 17,000 subscribers during its first few months.
The Jazz are one of eight NBA teams that produced their own games, and the rare team that handled ad sales against them. The expanded reach of access to the entire state of Utah by airing games on KJZZ versus the 39% that could be reached on the AT&T RSN has helped boost ad sales 50% to a projected $16 million for the season. The tally is up from $6 million three years ago. Controlling the inventory is a plus on the sponsorship side. “We feel like we can build these comprehensive multimedia partnerships with a sponsor to really help push their brand forward,” Barney said.
As NBA teams await the court rulings, those with Bally Sports deals are laying the groundwork for what’s next. Teams are building intelligence on what their options are.
“Without the pay TV bundle, teams have no access to the fee-based economics which paid 80% of the bills and supported their rights fees,” media consultant Patrick Crakes said in a phone interview. “Streaming isn't the answer to anything, but it can be part of a solution."
Crakes sees a scenario where some teams return to Ballys RSNs in 2024-25 with another haircut to their rights fees and then make up part of the gap via streaming.
Bankers don’t see the local TV disruption as a huge hindrance to NBA team values. The content is valuable and can be monetized in time. Their focus is on the next national TV deal that will bring the NBA model closer to the NFL one, with a huge annual check from the league office. The NBA’s valuation gap with MLB continues to expand, with basketball teams going from a 7% premium three years ago to 69% now.
The next NBA TV deal tips off with the 2025-26 season, but most observers expect a deal in place by next summer. The current nine-year deal is worth $2.66 billion a year on average. A 200% bump was floated a couple of years ago, but under the current media landscape, most teams are expecting something between 100% and 150% in an agreement that could include as many as five partners, with three on the linear side and two streamers.
The new deal will be a windfall for teams in two ways: the annual rights fees and in helping establish the inevitable expansion process. Commissioner Adam Silver has said the league would turn its attention to expansion after the collective bargaining agreement—signed in 2022—and TV deals were done.
Mexico City, Vancouver and Montreal have been suggested as possible options, but Seattle and Las Vegas remain the overwhelming favorites to land the two bids. Potential investors have been circling both markets for several years and lining up financing and arena options so they can move quickly. The last expansion occurred when Robert Johnson paid $300 million for the Charlotte Bobcats (now Hornets) and started play in 2004. Both of the new potential teams will command at least $4 billion and maybe as much as $5 billion.
NBA teams must share revenue with players under a roughly 50-50 split, per terms of the collective bargaining agreement. Not so with expansion proceeds, with each owner set to score another win with a check worth $300 million or so.
