NBA Is a License to Print Money… For Now

This is a guest article by Andy Bond. Andy is a writer and blogger from Seattle, Washington.  His favorite teams are the Seattle Seahawks, Los Angeles Lakers, and Washington Huskies.  When he’s not writing, Andy enjoys skiing, mountain biking, and hiking.

You like something you buy it. They continue making it. You don’t like something you don’t buy it. They change it and make it better. That’s how the world works. Well, that’s how the world works everywhere except the National Basketball Association.

Forbes released its “NBA’s Most Valuable Teams 2017” and guess who’s on top? No, it’s not the Golden State Warriors or the Cleveland Cavaliers—although it’s cute that you think something from Cleveland can be the most valuable anything.

No, the National Basketball Association’s most valuable team is the New York Knicks. They are worth $3.3 billion dollars. This is a team who hasn’t made the NBA Playoffs since 2013. Spike Lee’s boys won 32 games last season and 17 the season before that. They are currently 12th in the East with a .397 winning percentage. Although, they do lead the league in Charles Oakley ejections.

The Knicks franchise is, by all accounts, a joke. A very valuable joke, but a joke nonetheless.
If you’re a Knicks fan, and by that I mean a real fan, not a celebrity who wants to sit courtside and be seen, this has to be distressing. If your favorite franchise is making money hand-over-fist, but is 12 games under .500, where’s the incentive to improve?

For the 2015-2016 season, the Knicks turned a profit of $141 million. That set an NBA-record. If losing 50 games makes that much money. Why even try to be good? The NBA’s second most valuable franchise are the Los Angeles Lakers. They are valued at $3 billion. They had an awful year on the court, winning just 17 games, but made $119 million in profits thanks to milking Kobe Bryant’s retirement for every cent. During his final game at Staples Center, the franchise sold $1.2 million in Kobe merchandise.

Like the Knicks, the Lakers haven’t been to the postseason since 2013 (although they did win the NBA championship in 2010). Currently, they have the third-worst record in the league.

Sanity finally rears its ugly head at spot number three. There, we find the Golden State Warriors. The franchise is worth $2.6 billion. That’s up 37 percent from a year ago.

The Warriors currently have the best record in the league. They won a record 73 games last season and the NBA title the year before that.

Further helping their bottom line is a new $1 billion arena on the horizon and stellar television ratings.
Returning to the list, the Bulls are fourth at $2.5 billion, the Celtics are fifth at $2.2 billion, the Clippers are sixth at $2 billion.

The five least valuable NBA teams are the Memphis Grizzlies at $790 million, Milwaukee Bucks at $785 million, Charlotte Hornets at $780 million, Minnesota Timberwolves at $770 million, and New Orleans Pelicans at $750 million.

The most interesting part of Forbes’ list is the Sacramento Kings are the 15th most valuable franchise at just over $1 billion. A team from the 35th biggest city in the nation, that hasn’t made the postseason in a decade, is worth more than the Oklahoma City Thunder, Atlanta Hawks, Indiana Pacers, and Philadelphia 76ers.

Obviously, things don’t work the way I think they should work. I think when a team is bad, fans shouldn’t attend their games or buy their merchandise. This loss of revenue then prompts team management to work harder and field a winner.

Call me a fair-weather fan, but I’m not spending my hard-earned cash on tickets to see a crappy team. I won’t jump ship, but my wallet stays closed.

While some of the worst teams are the most valuable, the best squad lost money. Your reigning NBA champions, the Cleveland Cavaliers, lost more than $40 million during the 2015-2016 season.
Despite high television ratings, and the second-highest league attendance, the Cavs’ high payroll put them in the red.

Valued at $1.2 billion, the defending champs are the league’s 11th most valuable franchise.
The Los Angeles Clippers and Oklahoma City Thunder also lost money last season.
Winning doesn’t necessarily lead to huge profits, and losing doesn’t necessarily lead to arrears. What makes for a successful NBA team nowadays are billion-dollar arena renovations (Knicks), $2,750 courtside seats (Lakers), and $300 million arena naming rights (Warriors).

It’s sort of the golden age for the NBA. The league just started their nine-year television deal worth $24 billion, they have a collective bargaining agreement that ensures labor peace through the 2023-2024 season, and hoop is the most global team sport after soccer—there were over a billion unique viewers of NBA games worldwide last season.

Investors are tripping over themselves to get into the Association. Nary a majority stake is up for sale, but the league did refinance $300 million of its $3.5 billion credit facility.
All this begs the question: have these investors watched the NBA lately? When I actually find a game that isn’t a blow out, and I watch it all the way to end, it’s usually ruined by a phantom foul.
Today’s NBA’s game makes me long for the era when Shaquille O’Neal lowering his shoulder and knocking over guys on his way to hoop was considered basketball.

There’s 30 NBA teams but only four are any good. Even better, only half have a legitimate shot at winning the title.

I’m not proposing the NBA enact financial punitive measures on bad teams. The NBA wanted a league where teams will be profitable if they keep their salaries respectable. They got it.
I am proposing that the NBA is currently a mediocre-to-bad product. If a product of that low-quality results in a license to print money, then we’ve got a bubble.

I think this bubble will burst the second after the NBA experiences its first game where every shot is either a dunk or a three-pointer.


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