Sportico, the sports business site, is the latest website to try to value the NBA’s 30 teams and in its analysis, out Monday, put the Nets valuation at $3.4 billion — about what Joe Tsai paid for it in September 2019 — making Brooklyn the league’s fourth most valuable. Only the Knicks, Warriors and Lakers ranked higher with New York’s valuation of $5.4 billion topping the NBA despite, as Sportico wrote, “posting a losing record over 16 of the last 19 seasons,”
The Nets’ value, which includes both the team and arena operating company, is higher than what Forbes valued the team back in February. Forbes put the Nets at $2.5 billion, ranking them seventh and meaning Tsai dramatically overpaid.
Here’s a screen shot of how Sportico valued the team (h/t to Atlantic Yards Report)...
Of course, the value and ranking came before the Nets traded for James Harden and formed what many believe is the most talented “Big Three” in the league and enhanced the possibility that Brooklyn will bring home the Larry O’Brien trophy in July which would push the value higher.
Sportico, like Forbes, is handicapped by the lack of publicly available information on many of the teams’ finances and to a certain extent must be based on secondary sources. Here’s their definitions of 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.
The definitions raise a number of questions, as Atlantic Yards’s Norman Oder, who’s done his own extensive valuations of the Nets, points out in a lengthy analysis of the Sportico and Forbes estimates, published Tuesday. Among Oder’s points....
The Nets are only 11th in reported revenues (both national and local) and Sportico’s metric makes no mention of what I’d argue is a more important metric: net income, or profit. (My tweet about this drew no official response, though one respondent, an appraiser, suggested net income could be fungible.)...
Last February, according Forbes chart of team valuations, the Brooklyn Nets had only $42 million in operating income last season, ranked #25 in the league, and the Nets were second-to-last in revenue per fan.
Oder also notes that, as he has in the past, “The value of the Nets seems partly based on trophy value, the New York City market, and future success.”
On the other hand, Oder notes what Harden could do for the team’s valuation as well as on court record.
That valuation was calculated after last season and before the astonishing trade that brought superstar James Harden, so based on Sportico’s metric—and putting aside the relatively small coronavirus-imposed drag on revenues—it presumably would rise, given Harden’s arrival.
There’s also another element that Sportico and Forbes don’t discuss: Tsai isn’t about to sell the team. According to various sources, he sees the Nets, Barclays (and New York Liberty) as “legacy” investments, that is investments he intends to keep long-term and pass on to his three children. Moreover, despite reverses in the value of his stock in Alibaba, Tsai remains one of the NBA’s richest owners at $13.1 billion, behind only Steve Ballmer of the Clippers and Dan Gilbert of the Cavaliers.
Bottom line: whatever the Nets are worth, it’s a lot more than they were worth 10 years ago when Mikhail Prokhorov slapped down $225 million in cash, assumed $160 million in team debt and agreed to finance $60 million in basketball operations costs to acquire 80 percent of the team and 45 percent of an unbuilt arena. And a lot more fun to watch!
- Three NBA Teams Top $5 Billion in Sportico’s 2021 Franchise Valuations Report - Peter J. Schwartz - Sportico
- Sportico: Brooklyn Nets and arena company worth $3.4B, fourth in the league (before Harden trade). Still, revenues only 11th—and paltry past profits ignored - Norman Oder - Atlantic Yards/Pacific Park Report