Though Forbes says the Brooklyn Nets & arena company are worth $3.85 billion, rising tide in NBA valuations likely means higher number.

Screenshots from Forbes

In its latest article on NBA team valuations, Forbes declares that the "average NBA team is worth $3.85 billion, an increase of 35% from a year ago," with the Golden State Warriors worth an estimated $7.7 billion and the New York Knicks and Los Angeles Lakers both clearing $6 billion.

Curiously enough, the Brooklyn Nets's value, including the arena company, dropped six spots to 13, as the valuation rose only 10%, to $3.85 billion, virtually the same as Sportico's assessment last December. 

That's well more than the estimated $3 billion (or Forbes's $3.2 billion) Joe Tsai spent to acquire the team and arena company from Mikhail Prokhorov. 

(Though Tsai has lost money on the team in a few years, and steadily on the arena, the tax breaks likely make those losses far leass painful.)

That Brooklyn valuation seems questionable, given that the Phoenix Suns sold for $4 billion, the small-market Charlotte Hornets for $3 billion, as well as a sale of a piece of the small-market Milwaukee Bucks at a $3.2 billion valuation.

After all, not only do the Nets benefit from the New York City location, the team will gain from the expected "major increase in media rights." Moreover, the expected league expansion--hello Las Vegas and Seattle--should mean teams worth at least $4 billion, with that cost distributed to the current owners.

Moreover, as Forbes explains in a companion article, sponsorships "could see double-digit growth" during this season. (If so, will Barclays get bought out as an arena sponsor?)

About the Nets

In its page on the Nets, Forbes notes that last season was rough, with the firing of coach Steve Nash and the departure of superstars Kyrie Irving and Kevin Durant, though the trade assets helped "reset their future."

As shown in the bar graph below, the Nets' operating income has dipped recently, though, with lower player expenses, that could change.

Sussing out the valuation components

These estimates are more art than science. Consider the pie chart below, which attributes $1.52 billion of the Nets' value to the sport, $1.1 billion to the market, $858 million to the arena, and $366 million to the brand.

In the 2022 valuation, Forbes attributed $1.29 billion of the value to the sport, $1.2 billion to the market, $673 million to the arena, and $381 million to the brand.

But in the 2021 valuation, Forbes attributed $2.2 billion of the value to the sport, $614 million to the market, only $31 million to the arena, and $359 million to the brand.

As I wrote, that seemed arbitrary, especially since the arena in previous years was said to contribute $607 million and $577 million to the valuation. After all, without an arena located in Brooklyn, the "market" wouldn't be much.