Kings and the Business of Basketball
I've mentioned this before during the Lockout, but Forbes does its best to estimate the value of NBA franchises and their profitability. This is a link that is supposedly calculated as of this month.
Now this was obviously before the $500 million sale because this estimated the Kings as worth $300 million. Another nice note is that it tells us the Maloofs paid $156 million to buy the Kings in first place. Considering most years they made money off the team, they really did great on that investment. And that despite being one of the worse owners in the league playing in a small market with a lousy stadium. Really the rules are rigged so that all the owners win no matter what.
Anyway, the Forbes folks just got their estimate off by, oh, 66% for a cool $200 million. I guess they better sharpen their pencils, get out the calculators and run their numbers again because $300 million clearly wasn't what the Kings were worth.
You do realize some people pay over market value right? Despite the kings only being worth 300 million, there are only 30 NBA teams so that boosted the value, and the buyers are very desperate for a team back in Seattle so guessing they hardly negotiated or compromised.
That team is not worth $500 Million, moving the team to Seattle doesnt make it worth $500 Million either, this is not like moving a team to say....Brooklyn. Seattle is the 13th largest television market. As much as we love basketball, its not football, you dont print money. From reading some books on sports economics, a lot of these rich people will borrow money, set up an entity where they can write off some losses of the bball team against their gains (their regular 9-5). Are the new owners going to own the television channel like MSG and I doubt they will get a lot of money locally for a television deal. I work in finance, not at the level of advisory, but I think i know enough to say that the price is terrible.
Maloofs also have money problems, so $500M is a good get