How Valuable ARE NBA Franchises?

knicks_logoForbes is out with its list of the top 50 most valuable sports franchises in the world.  The top five shouldn’t be very surprising.  Manchester United at #1 and Real Madrid at #5 represent two of the most popular soccer teams of all time.  Even non-soccer fans know them.  The Dallas Cowboys (2) and Washington Redskins (4) boast some of the most rabid fan-bases of America’s far-and-away most popular (and profitable) sport.  And the New York Yankees at #3 are baseball’s juggernaut. 

Every one of those franchises is worth, according to Forbes, between $1.86 billion and $1.45 billion.  But as we scroll down that list, one thing stands out:  there almost NO NBA franchises there.  You have to go all the way down to #47 to find the New York Knicks (valued at $655 million) and the Los Angeles Lakers right behind them ($643 million).  An even closer look at the list shows it’s dominated by soccer and NFL franchises with a peppering of racing teams and only the biggest market baseball teams. 

So what does that tell us? 

For starters, the NFL is a cash cow.  The league made $9 billion in revenues in 2010.  No wonder the lockout ended before games were lost.  There’s WAY too much money at stake for these guys.  Major League Baseball’s 2010 revenues were around $7 billion (more on this in a minute).   Meanwhile, The NBA was just below $4 billion.  That means the NFL makes more than twice as much money as the NBA.  Chew on that for a moment.

And while baseball is ahead of the NBA, the numbers are deceiving.  Because of the size of the parks and a schedule that’s twice as long, MLB saw almost 51 million more fans than the NBA last year.  At the average ticket price (about $27), that difference in attendance counts for approximately $1.3 billion extra for baseball.  

And baseball has a bit of a head start.  The first Major League Baseball team was formed in 1861. The NBA was created in 1949.  So baseball had almost 90 years to capture the hearts and minds of fans.  It became our “national pastime.”  It was passed down from generation to generation and only now that lifestyles have grown infinitely more fast-paced has baseball started to see some slippage.  

Meanwhile, the NBA has had not only far less time, but far more difficulty in marketing itself.  It really wasn’t into the mid-80’s that the NBA truly rounded into money-maker.  It wasn’t until Larry Bird, Magic Johnson and Michael Jordan came about that the NBA soared into the mainstream. Remember, CBS was airing NBA playoff games on tape delay all the way up to 1986.  So the NBA has only been “worthy” of full-time live television coverage for the past 25 years. 

And now let’s add in the mid-90’s NBA marketing issues, otherwise known as the Allen Iverson era. 


Like it or not, the reality of the Iverson era was the game became known as much for the tattoos, hip hop and player entourages as it did for what happened on the court.  And like it or not, that was shocking and off-putting to a lot of fans.  It is why the NBA took steps like instituting dress codes.  The NBA had a marketing issue that needed to be addressed.  It was hurting the overall product.  And that meant fewer people were spending money on it.  And that cuts into the value of the franchises. 

Today, the NBA is on a definite upswing.  Those mid-90’s issues are now accepted and even celebrated in some ways.  Television contracts have swollen.  Its popularity is rising.  Its stars are more recognizable and many of them are quite likable.  Not only that, they have embraced a level of engagement with fans through social media that is helping to push the sport even further.  It’s why this lockout is so crucial to both sides.  They each see the sport gaining momentum, and they each feel like a misstep now will be greatly magnified down the line.

But still, the NBA lags behind its counterparts.  They’re not going to catch the NFL any time soon. They’re untouchable.  They just went through a lockout and that only served to get people more excited about all the player movement.  And no one bats an eye if players get busted for performance enhancing drugs.  Major League Baseball may be returning to Earth as far as popularity, but the head start it had helps put it far ahead of the NBA.  The Knicks and Lakers have been able to creep into the top 50 thanks to a few different factors.  The Knicks own their own network and play in the America’s biggest city.  The Lakers have the second most championships in league history, play in the second biggest but perhaps most glamorous city, and had some of the league’s biggest stars (Magic Johnson, Shaquille O’Neal, Kobe Bryant) to boost its worldwide appeal. Those give the Knicks and Lakers the advantage over the rest of the NBA, and thus make them more valuable overall.  

Soon, though, the NBA’s entry into China and Europe will create a bigger market for its product, which will carry those franchise values even higher. Basketball is a global sport much like soccer is, but it’s nowhere close as far as popularity.  But it someday might get close.  It’s matched soccer in some European countries and it seems to be the most popular sport in China.  If it can make the same headway elsewhere, then the NBA’s overall value will be carried with it.  But that’s a long road.  Right now, the NBA will have to settle for being third.  We can only hope this lockout doesn’t kill the momentum.