According to sources, the league is seeking a franchise fee of $8 billion to $10 billion for each of the new teams. That would mean a payout of more than $500 million to every current NBA owner?and ample incentive to vote yes, even after accounting for a 32-way split of annual revenues. But if the bidding were to top out at, say, $5 billion per expansion team, that might turn more owners against the initiative entirely, one source suggested. One more twist, per sources, albeit a speculative one: If another city with NBA aspirations were to emerge with a lucrative offer?say, $10 billion or more?it?s conceivable the league could turn away from Seattle or Vegas. Because, again, this is ultimately all driven by money.
The Ringer
I just don't get this. The Celtics were sold in two parts, with the first part being valued at a $6.1 billion valuation, and the subsequent deal to be completed in 2028 at a valuation in excess of $7 billion.
The Lakers sold for $10 billion. I believe this includes their stadium.
Why would owners buy brand new franchises for $10 billion, when they could have had one of the crown jewel franchises in all of sports for that amount, or significantly less?
I remember reading an explanation of this a while back - it has to do with the new TV deal. The per team shares of that TV money is huge. They would be losing money per team if they allowed an expansion team in at $6bn.
What was it. They get an equal share of the $6bn divided by 30 teams so $200mil each. They would end up losing money on that deal due to the TV shares per team being greater than that. They were better off having no expansion and just keeping the TV money among themselves. So the expansion fees had to go sky high.
I get it from the perspective of current owners. They're trying to leverage as much money as they can, and it has to be worth their while.
I'm just thinking more from a prospective buyer's point of view. If you've got $8 billion to $10 billion burning a hole in your pocket, why buy a team in Seattle? Why not buy the Lakers or Celtics?
I think with this new expansion fee and new TV deal all the valuations of the existing teams will skyrocket as well. Lakers and Celtics will jump up in value too.
My understanding is that it is difficult to buy an NBA team. That there is this shortlist of people who have asked to buy a team. A long shortlist. Teams don't come up on the market often. I don't think it is as simple as one buyer going to an existing owner and making an offer to buy it. The NBA league office plays favourites with who they want to buy teams. So you have to be liked by the league office / commissioner. You are doing a lot of politicking in the background to try and say you will be a good owner / representative of the league in order to be accepted.
Not just everyone on that shortlist gets to make an offer. And if you are not on the shortlist, you don't get to make an offer. You have to wait your turn. So if you are far down on the shortlist or if you haven't politicked enough, you won't even get to make an offer. There is all sorts of weird things going on there. I don't understand it. Anyway, it is not a straightforward offer / accept / buy situation.
And the NBA is never short of buyers. They have that shortlist of people. It is more the lack of people wanting to sell teams. They see the raising TV money and team evaluations. They don't want to sell.
Oh, the league also looks down on buyers who are only interested in buying a team in a certain city. They only want Team X. Not Team Y. So you are in the queue and you are expected to buy whatever team comes on the market next. And if you are not willing to do that, you will be dropped down the shortlist. They want that commitment before hand - to buy whatever team is next. Not just a team in LA or NYC but a Minnesota or Charlotte.
It is weird system. I don't understand it.
In hindsight, a lot of people missed the ball on buying the Celtics / Lakers because those prices were bargains now compared to what these expansion franchises have to pay. And missed the ball even worse on buying other lesser teams for much lower money.
I imagine the Celtics / Lakers would have to be worth $12-15 billion now given those expansion fees. So those new buyers have already seen a huge increase in the value of their teams.
