On That Clippers Sale: A Counterpoint

Our esteemed EIC and all around good guy Andrew Hall wrote this troll bait blog earlier questioning the wisdom and long-term ramifications of a historically moribund franchise in the Clippers being sold for a reported 2 Billion dollars. Zune Pope and all around crazy person Steve Ballmer is putting up, as Andrew noted, a reported 10% of his net worth (I bet it’s less than 10%, but whatever) to purchase a team that has historically been horrible. Aside from my normal position of not telling Billionaires what to do with their money, there are lots of reasons why this deal is so big and why 2 Billion might be a steal.

(For what it’s worth, I know Billion isn’t capitalized normally, but I feel when you drop that kind of change, the least I can do is toss in a free capitalization.)

Forbes’ annual valuation of teams put the Milwaukee Bucks at $405 million dollars this winter, and they sold a few months later for a then-record $550 million, setting a precedent that cannot be ignored. Like the Clippers, the Bucks are a historically not-so-competative franchise. Unlike the Clippers, the Bucks aren’t any good now, they don’t have a superstar player, an old arena, beaten fans, AND they aren’t in LA, a top-2 TV market. So from that starting point, we can assume an easy 35% increase from their estimated value of $575 million.

Now comes the fun part.

What Forbes didn’t account for is the recent owner-friendly CBA, and the upcoming media rights deal which will further expand NBA earning capacity overseas (which is the real reason why Goodell keeps trying – and failing – to expand the NFL internationally). And honestly, how could you account for this? There is a potential financial windfall coming that no one could have predicted as recently as 2011, when six NBA teams changed hands, and four more were openly for sale. Hell, the Philadelphia 76ers sold for a paltry $280 million right before this new CBA was signed. The NBA has turned into a multimedia powerhouse, and the new media rights deal is going to easily double the existing one. Now? Getting a shot at owning an NBA team is next to impossible, which in turn brings us to the biggest reason that this was a great deal: competition.

As owning an NBA team becomes simultaneously cooler and super-profitable, the opportunity to own one has never been more scarce. That record $550 million the Bucks sold for this spring? That’s the new FLOOR for franchise purchases going forward, because the bidding process is turning into drinking games for ultra rich people. According to this LA Times article, bidding OPENED at 1.2 Billion and jumped to 1.6 Billion (rejected offers, mind you), before the Zune Pope stepped in and crushed the buildings. Bottom line: this is the new NBA, and the next time we see a franchise change hands I bet we see some more Billions get tossed around.

INTERNET: Ballmer gif me.

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Posted on May 30, 2014, in Blog, General Sports, NBA, Podcast. Bookmark the permalink. 1 Comment.

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