National Basketball Association (NBA) team, the New York Knicks, have been named the league's most valuable franchise in Sportico's 2021 Franchise Valuations Report.
The report revealed that the Knicks, Golden State Warriors and Los Angeles Lakers lead the other 30 teams within the NBA by a considerable margin, with the three franchises all valued over $5 billion. The next closest franchise was the Brooklyn Nets, valued at $3.4 billion and the Boston Celtics at $3.18 billion.
Throughout the 2019/20 season, which was disrupted and brought to an abrupt halt due to the coronavirus pandemic, the Knicks still managed to generate $150 million in operating income and $428 million in revenue, down 9 per cent year-on-year.
The Knicks' high valuation has been linked to the franchise exploiting the lucrative New York location they find themselves in.
The report also provided an average value of NBA franchises, which currently sits at $2.4 billion, down 2 per cent overall, which is thought to be related to the COVID-19 crisis.
The two lowest valued franchises were the New Orleans Pelicans and Memphis Grizzlies, both valued at $1.35 billion and $1.36 billion respectively.
Arctos Sports Partners managing partner, Ian Charles, told Sportico: “Fundamentally, sports franchise intrinsic value is a long-term durable asset with significant, long-term revenue and cash flow growth. The 12-to-24-month increase in operating losses or reduction in positive cash flow should not have a significant impact on the intrinsic value of these franchises.
“If someone is selling control of these assets in the next 12-to-24-months, there likely should be some purchase price adjustment.We are talking 0% to 3% in our estimate."
Author: Jake Wilkin