When David Stern steps down from his role as NBA commissioner on Feb. 1 after 30 years in the top job, he’ll leave the league almost unrecognizable compared with the one he inherited in February 1984. Once a struggling also-ran to other professional sports, the National Basketball Association is now a global money machine, thanks in large part to Stern’s leadership on labor relations, drug testing, team expansion and other issues. NBA revenues, which were $118 million for the 1982-83 season, hit $4.6 billion for the league’s 30 teams last year. The Sacramento Kings—sold for $10.5 million in 1983—changed hands in May for $534 million. Playoff games were shown on tape-delay in the early 1980s, but are now broadcast live in 215 countries around the globe. The average NBA franchise is worth (equity plus debt) $634 million, up 25% over last year. Collectively the 30 teams are worth $19 billion versus $400 million in 1984 when there were 23 teams. Stern has served his owners well. Under his watch, every team built or completely renovated their home arena leading to total gate receipts of $1.3 billion last season. He pushed through a salary cap starting with the 1984-85 season that helped owners turn a profit and level the playing field (the cap has increased from $3.6 million to $58.7 million this season). With some help from Nike, Stern’s idea of marketing of individual star players—Jordan, Kobe, LeBron—created global celebrities and fueled interest in the game (see “Kobe, LeBron Lead NBA’s Highest-Paid Players“). No team has benefited more than the New York Knicks. The NBA’s most valuable team for a second straight year, the Knicks are now worth $1.4 billion, up 27% from a year ago. A three-year, $1 billion renovation of Madison Square Garden pushed the Knicks’ revenue to $287 million, net of revenue sharing, last season. The Knicks’ average TV rating on the MSG Network was 3.1, up 71% from the previous season, as the team made the second round of the playoffs for the first time since 2000 (both the Knicks and MSG are owned by publicly traded Madison Square Garden Company). The playoff run and arena renovation helped the Knicks generate operating income (earnings before interest, taxes, depreciation and amortization) of $96 million–a record for an NBA franchise. Profitability was up across the board in the NBA’s first full season since the 2011 lockout was settled. Operating income doubled to an average of $23.7 million, the highest since Forbes began calculating NBA valuations in 1998. The new collective bargaining agreement reduced the players’ cut of revenues from 57% to 50%. The CBA also boosted revenue sharing from the NBA’s haves to have-nots. Only $55 million changed hands under the prior CBA, but low revenue teams were supplemented nearly $120 million last season mainly from the league’s top revenue clubs. Close to $200 million is expected to change hands this season based on last season’s financials. Former perennial money losers like the Charlotte Bobcats, Milwaukee Bucks and Memphis Grizzlies all turned a profit last season thanks to at least $10 million each in revenue sharing. Overall, only four teams lost money on an operating basis by our count.
Knicks, Lakers Set Records As NBA's Most Valuable Teams
Forbes.com | Jan 22