Forbes says value of Brooklyn Nets boomed 25% in a year, to $4.8B, despite limited profits. Second-largest rise in NBA. Credit the Koch investment.
 |
| 2024 valuation; screenshot from Forbes |
NBA teams have gained an average of 15% in value over the past year, according to the latest estimates from Forbes, released Oct. 24.
But the estimated value of the Brooklyn rose 25%, the second-largest increase in the league (as noted by NetsDaily), to $4.8 billion.
That ranks the Nets eighth in the league. They were 13th in the 2023 valuations.
That rise bolsters the argument that Joe Tsai, primary owner of the team and the arena company, should pay for the privilege of getting a permanent plaza outside the arena, as it serves both visitors and sponsors.
Big bucks
Forbes estimates the Golden State Warriors are worth $8.8 billion, the New York Knicks $7.5 billion, and the Los Angeles Lakers $7.1 billion, with only four NFL teams and MLB's New York Yankees over that benchmark.
Notably, the thirst for NBA ownership--like "paintings for billionaires," as Jay-Z once said--means that, over the past decade, the value as a multiple of revenue has more than doubled, from 5.1 to 11.7 league-wide. Revenues are driven by new arenas and sponsors, but especially by from vastly increased media deals.
Curiously enough, while the first seven teams on the list have an average operating income (less than revenue, of course) of $148.5 million, the Brooklyn Nets managed their astronomical valuation with an operating income of just $43 million.
 |
| 2023 valuation; screenshot from Forbes |
How did the number come about? Well, it relies significantly on the purchase of 15% in Joe Tsai's overall BSE Global by the family of Julia Koch, widow of the businessman and right-wing financier David Koch.
InJune Sportico asserted that the Koch family was paying $688 million, not the presumed $900 million, for a 15% stake in BSE Global, which includes the Brooklyn Nets, Barclays Center operating company, and the New York Liberty, among other assets.
Though $688 million is nearly 15% of $4.6 billion, the full BSE valuation was still said to be worth $6 billion according to Sportico, or $5.8 billion according to the New York Post.
As I wrote last year, 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.
However, 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.
Though $688 million is nearly 15% of $4.6 billion, the full BSE valuation was still said to be worth $6 billion according to Sportico, or $5.8 billion according to the New York Post.
The Forbes valuation is an enterprise value (equity plus net debt), so it also includes the economics of the team’s arena (including non-NBA revenue that accrues to the team’s owner) but not the value of the arena real estate. That's helpful in this case, given that the land is technically owned by New York State, to enable tax-exempt bonds. (It also excludes the Liberty and other smaller assets.)
Financial trends
Forbes cited revenue of $381 million, up modestly from $367 million, operating income of $43 million, up significantly from a $5 million loss, and gate receipts of $73 million, up slightly from $71 million.
At least player expenses went down to $155 million, from $187 million, though surely that will change as the team acquires new assets.
 |
| Screenshot from Forbes |
Valuation breakdown
Some estimates are more art than science. Consider the pie chart below, which attributes $1.9 billion (up from $1.52 billion) of the Nets' value to the sport, $1.36 billion (up from $1.1 billion) to the market, $1.11 billion (up from $858 million) to the arena, and $433 million (up from $366 million) to the brand.
 |
| Screenshot from Forbes |
As I wrote last year, 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.
However, 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.
Comments
Post a Comment