CNBC: Brooklyn Nets (and arena company) worth $5.6 billion, sixth in NBA. Increase in media rights offers rising tide for all. Koch investment key.

Screenshot from CNBC

So CNBC, following Forbes and Sportico, is now offering its own NBA team valuations, declaring that the average team is worth $4.66 billion, thanks significantly to a new media rights deal in which the 30 teams share $6.9 billion a year over 11 years.

That's $230 million per team.

The article is by Mike Ozanian, who formerly did such valuations for Forbes.

The calculation, as always, is a bit of an art, relying on both revenues, including if the team owner controls the economics of the arena (as does BSE Global, with the Barclays Center), and valuations set by prices for sales or investment slices.

About the Nets

The Brooklyn Nets' valuation of $5.6 billion, sixth in the league, likely excludes the WNBA's New York Liberty (and the unspecified slice of the Paramount Theater), and is slightly less than the full BSE Global transaction when selling a slice to the Koch family, of an estimated $5.8 billion (or more).

Sportico last December valued the Nets at $5.7 billion, fourth in the league, while Forbes last November set a $4.8 billion valuation, eighth in the league.

Note that the Koch transaction valued the Liberty at $200 million, but the new entry price for Cleveland's WNBA team, as noted by NetsDaily, is $250 million. That implies the Liberty is worth more.

Doing the math

As I wrote regarding the Forbes list, the Brooklyn Nets--thanks to that Koch investment--managed their astronomical valuation with an operating income of just $43 million, net of debt service.

By contrast, CNBC assessed EBITDA (earnings before interest, taxes, depreciation and amortization) at $78 million, still well behind all but one of the teams judged more valuable.

It's likely that number includes payments in lieu of taxes (PILOTs) on arena bonds, but even that's a bit confusion. The arena company made $39.3 million in PILOTs in FY 2024. Subtract that and the total is $38.7 million.

However, I'd only subtract the $5.9 million in principal repayment and $21.8 million in interest, or $27.7 million, which would leave income $50.3 million after debt service. So it's difficult to harmonize the two.

The rest of the PILOTs, while an obligation for BSE Global to fund, actually went back to a fund for arena operations and maintenance.

Debt as a percentage of value

If the Nets and arena are valued at $5.6 billion and debt is 16% of value--the highest in the league--that suggests a remaining debt of $896 million. 

That's in the ballpark for the remaining arena debt, at least as estimated in 2016 and shown in the chart below. (Some of the Koch investment was said to have helped pay off debt, likely with the Nets rather the arena.)

Starting in 2025 from the chart, I added the figures in the "Estimated Net Debt Service" column, rounding them down or up to the nearest full two-digit number. (So $28,471,750 became $28 million.) I got $913 million, not $896 million. Still, that's pretty close..