Total Value: The sum of the fair-market value of an NBA franchise combined with the value of team-related businesses and real estate holdings.

Team Value: NBA franchise valuation, derived from metrics by which basketball-team transactions occur, including aggregating local and national revenues and factoring in a team-specific multiplier. This represents the fair-market value of the team itself, excluding related businesses held by its owners.

Team-Related Businesses and Real Estate Holdings: The value of a franchise or franchise owner's equity in team-related businesses—that is, both those on the team's balance sheet and held in distinct corporate entities—as well as government-assessed real estate related to venue, practice facilities and adjacent developments. Examples include: the Boston Celtics' 20% interest in NBC Sports Boston, a regional sports network; and the Dallas Mavericks' four subsidiaries, which own 11 parcels of land. For franchises that do not own their arenas, the value of a team's lease—often with advantageous terms negotiated with municipal or state authorities—is captured in the Team Value category.

Total Team Revenue: Cumulative amount of National Revenue and Local Revenue. Given the business disruption posed by the coronavirus pandemic during the 2019-20 and 2020-21 seasons, Sportico estimated three years of revenue. The projected revenue accounts for fans in buildings with no capacity restrictions, as well as revenue from non-NBA events, such as concerts, in cases where teams own or operate a building. It is regular season only and does not include any playoff home games. All revenue figures are net of revenue sharing.

National Revenue: Each franchise's equal proportion of league-shared revenue, derived predominantly from NBA contracts with media and advertising partners. This consists of:

(i.) National media (broadcast deals with SiriusXM Radio, Walt Disney Company and WarnerMedia; distributions related to NBA League Pass pay-per-view; sum-total of international and other broadcast agreements).

(ii.) League sponsorship (e.g., American Express, Kia Motors and Nike) and licensed merchandise royalties (through league subsidiary NBA Properties).

(iii.) Distributions and dividends related to NBA Media Ventures (the league's digital media arm, which incorporates some retail operations), NBA TV (a cable television channel owned by the league and operated by WarnerMedia), NBA China and NBA Africa.

Local Revenue: Revenue generated by each franchise independent of league distributions. This is comprised of:

(i.) Stadium, which includes: ticket sales; premium seating (luxury suite leases and club seating); parking; team's share of concessions; and non-basketball ("third-party" or "marquee") events when venue is controlled by team.

(ii.) Sponsorship, which includes: naming rights, advertising, corporate partnerships and local merchandising (distinct from league licensing royalties in National Revenue).

(iii.) Media, which includes local TV and radio (e.g., for the Brooklyn Nets: YES Network and WFAN-AM/FM).

Full Transparency

Sportico is committed to transparency, including provision of detailed methodology and sourcing information below. For any additional questions, please contact sports valuations reporter Kurt Badenhausen at kbadenhausen@sportico.com.


Fair Market Franchise Valuations

To derive the fair market value of the 30 NBA franchises, Sportico calculated each team's revenue relying on publicly available information and financial records—and interviews with those knowledgeable of team finances, including a half-dozen sports bankers and attorneys who actively work on NBA transactions. We traded candor for anonymity. This information was vetted by multiple team or parent company CEOs, presidents, chief financial officers and media relations personnel, as well as industry experts and investors.

Revenue totals were then subject to a team-specific multiplier, which, based on interviews with multiple sports bankers, remains the only reliable manner by which transactions occur, due to dramatic fluctuations of earnings before interest, taxes, depreciation and amortization (EBITDA), year-over-year, based on salary cap spending and special expenses.

The team-specific multipliers were based on multiple factors, including: historical sales, market (size, saturation, and interest by prospective owners), strength of brand, on-court performance (historical and recent), terms of facility lease, debt burden, and expected future team and league economics. These ranges varied from 5.75 times revenue (Cleveland Cavaliers) to 11.5 times revenue (Los Angeles Lakers). In 2017, the Houston Rockets sold for approximately nine times revenue.

Revenue was calculated based on analyses of data from industry sources and reports, as well as interviews with experts and those with knowledge of team and league finances (detailed below); together, this comprised hundreds of inputs of confirmed and estimated information from dozens of sources, which were amalgamated and presented to each team for review and comment.

Given the business disruption posed by the coronavirus pandemic during the past two seasons, multiples were assigned to a projected full season of revenue with fans in buildings.

Sportico's revenues and valuations take into account league revenue sharing. In the NBA, 10 teams pay into revenue sharing to be distributed to low-revenue clubs under a complicated formula. The pool is supplemented with 50% of luxury-tax payments from teams with high payrolls.


NBA Franchise Review and Comments

Among the 30 NBA franchises, 10 teams participated with Sportico by providing or validating financial information; in total, 16 teams responded to our inquiries.


Financial and Industry Sources

Team and league financial information was derived from the following sources: NBA bond ratings by Fitch Ratings (including for the NBA itself, as well as affiliates Basketball Funding LLC and Hardwood Funding LLC); Security and Exchange Commission filings for Madison Square Garden Sports Corp. (multiple 10-Ks), as well as those of related entities Madison Square Garden Entertainment; the 2017 NBA-NBPA Collective Bargaining Agreement; and analyses of historical team sales from 1999 to 2021, based on Sportico research.

Industry data sources include: the Association of Luxury Suite Directors (for club and luxury suite capacity, occupancy and pricing); Team Marketing Report (fan spending and ticket pricing information); individual team and sponsor websites; Chris Bigelow of the Bigelow Companies (per capita spending on stadium concessions); S&P Global Market Intelligence (subscriber, revenue and cash flow data pertaining to regional sports networks); The Canadian Radio-television and Telecommunications Commission's Discretionary and On-Demand Service data (pertaining to two separate TV outlets owned or partially owned by Toronto Raptors' parent entities).

In addition to the sports bankers, team owners and team executives discussed above, Sportico interviewed Ed Desser of Desser Media and Lee Berke of LHB Sports & Entertainment & Media (to assess regional sports networks); and Marc Ganis of Sportscorp (NBA's foreign ventures).


Government Sources

To assess team-owned real estate with consistency, Sportico included government property appraisals. Sources included: City and County of Denver Property Appraisal System (Colorado); City of Milwaukee, Property Assessment Database (Wisconsin); City and County of San Francisco, Office of Assessor-Recorder (California); Cook County Assessor's Office (Illinois); Dallas Central Appraisal System (Texas); District of Columbia Office of Tax and Revenue; Hennepin County Property Information (Minnesota); Los Angeles County Property Assessment Informational System (California); Multnomah County Property Value and Tax Graphs (Oregon); Salt Lake County Assessor (Utah); Toronto Real Estate Board (Ontario); and Maricopa County Assessor's Office (Arizona).

Sportico obtained additionally relevant information for the valuation of a regional sports network related to the Denver Nuggets from pleadings in Altitude Sports & Entertainment v. Comcast Corp. (U.S. District Court, District of Colorado).

Many of the NBA related-business values are for ownership stakes in arenas, practice facilities and surrounding real estate. Below are notes on nine teams with caveats.

• Brooklyn Nets: Valuation includes the Barclays Center's operating company, BSE Global, which team owner Joseph Tsai purchased in tandem with the franchise in a two-tranche transaction from 2018 to 2019.

• Chicago Bulls: The Bulls and MLB's Chicago White Sox share common ownership, which, in turn, owns 50% of NBC Sports Chicago, a regional sports network that airs many of those teams' games. For purposes of this valuation, that 50% allotment was ascribed a 30:20 attribution in the White Sox' favor, given that there is more inventory dedicated to baseball games over the course of a broadcast year.

• Denver Nuggets: Stan Kroenke and his family own both the Nuggets and NHL's Colorado Avalanche. The team's related business value is largely derived from a 50% interest in Ball Arena and its real estate, with a small contribution from Kroenke Sports & Entertainment's money-losing RSN, Altitude Sports & Entertainment.

• Golden State Warriors: For businesses with high real estate values (such as hotels and stadia), it is common practice to include the full value in the transaction price, according to economist Ilhan Geckil, a managing director of consulting firm EconOne. Prospective buyers and sellers would then make purchase price adjustments pertaining to cash and debt thereafter. Pursuant to this norm—and since Sportico's valuations are based on the fair-market value for which the team and its holdings would sell (not net amounts)—the full value of the Warriors-owned Chase Center, as assessed by the City and County of San Francisco, has been included within the team-related business category. The Warriors, as sole owners of the venue, have the authority to sell it at their discretion.

• Los Angeles Clippers: The $66 million value of real estate purchased by Clippers' owner Steve Ballmer for the team's new arena has been included in the franchise's valuation, along with the team's practice facility. The Clippers broke ground on the Intuit Dome in September, and the value of the team is likely to increase further as the project heads toward its 2024 opening.

• New York Knicks: The Knicks' related business value includes stock held by the Dolan family in Madison Square Garden Entertainment, which could sell in a transaction in tandem with the team—itself a part of a separate publicly traded company, Madison Square Garden Sports Corporation. The equity value of Class A stock in the two related entities (as of close of trading on 12/14/2021), as well as the estimated value of Class B stock in those companies—as held by the Dolan family, pursuant to information in SEC disclosures—were assessed, reduced proportionally to account for business segments related to the basketball team, and included.

• Philadelphia 76ers: The 76ers and hockey's New Jersey Devils share common ownership. Unlike four other teams with shared NBA-NHL ownership, however, all ancillary businesses that affect valuation are in this case on a single team's books—the 76ers. As a result, the value of these entities are not split among the two teams and instead are allocated as basketball-related businesses. This includes stakes in Dignitas eSports, Elevate Sports Partners (a sports management company in partnership with the NFL's San Francisco 49ers), the Harris Blitzer Sports & Entertainment Venture Fund I (which incorporates 20 investments without outside capital), Harris Blitzer's Innovation Lab and real estate.

• Toronto Raptors: The valuation of the team's interest in regional sports media includes two components: (i.) equity ownership of NBATV Canada (formerly Raptors NBA TV, solely owned by the Raptors' parent entity, Maple Leaf Sports and Entertainment); and (ii.) the value that the Raptors represent to team co-owner Rogers Communications' cable TV network, Sportsnet One, based on analyses of financial and programming data. Team-related property (split where applicable with sister entity, the NHL's Toronto Maple Leafs, and two real estate development joint-venturers, Cadillac Fairview Corporation and Lanterra Developments) were assessed using the currency exchange rate as of 12/10/2021.

• Washington Wizards: The valuation of the team's interest in regional sports media includes two components: (i.) ownership's stake in NBC Sports Washington attributable to the team; and (ii.) to a far lesser extent, the value of the streaming platform Monumental Sports Network that is attributable to the Wizards. The value of Capital One Arena was split equally with sister entity, the NBA's Washington Wizards. The city owns the land on which the arena was built.