Oklahoma City Thunder v Los Angeles Clippers - Game Six

Are the Clippers really worth $2 billion? Five things that drove up the price.


Any time you mentioned the Forbes Magazine NBA franchise valuations to some involved with the league, they scoffed at the numbers. They were seen as wildly inaccurate. (We in the media kept using them because outside of the occasional team sale there were no other good measures.)

Forbes estimated earlier this year that the Los Angeles Clippers were worth $575 million.

Thursday Shelly Sterling agreed to sell the Clippers to Steve Ballmer for $2 billion. (Whether that sale holds up legally remains to be seen.)

That sum raised a lot of eyebrows — are the Clippers really worth $2 billion? Everyone’s first reaction is that it seems high (and if the Clips are worth $2 billion, what are the Lakers worth?).

The easy capitalist answer is that a team is worth whatever someone is willing to pay for it. So, yes, that sense the Clippers are worth $2 billion.

But there are a series of factors that drove up the Clippers price to incredible heights.

• The team is in Los Angeles. L.A. is the second biggest media market in the United States with more than 13 million people in the metropolitan area. More importantly than that, the City of Angels has a whole lot of very rich people — Forbes estimates there are 30 billionaires in Los Angeles County alone, there are more than 200,000 millionaires — and those are the people that buy expensive seats near courtside. There are 14 Fortune 500 companies based in Los Angeles and countless more large corporations with offices there — the kind of companies that buy expensive luxury suites to impress clients. The bottom line is if you put a good product on the court you can sell the expensive seats that are the revenue fuel for professional sports teams in this era. Plus the Clippers have a string of 141 consecutive sell outs going. Yes, Los Angeles is a Lakers town first (that’s not changing soon) but there is more than enough market for a second team.

• New television deals are coming up. Right now the Clippers have a local television deal with Fox Sports West that pays them $20 million a season — which is less than teams like the Detroit Pistons and Cleveland Cavaliers make — but that deal is up after the 2016 season. Clippers broadcast rights are going to spark a bidding war as entities like Time Warner Cable are expected to try to poach the team while current rights holder Fox Sports desperately needs to keep the Clippers to have enough good content to justify the two regional sports network channels they have in Los Angeles (Fox Sports West and Fox Sports Prime Ticket). Fox lost the Lakers and Dodgers to gigantic Time Warner deals in recent years, they can’t afford to lose the Clippers, and the Clipper ownership will benefit from that. This isn’t going to be as big as the Lakers deal (Los Angeles is still a Lakers town) but it will be big.

Then there is the fact the NBA is in the process of negotiating a new national television deal that will be much bigger than the current deal (rights for sports broadcasting have been going through the roof in recent years because it’s must-watch programing — people don’t DVR games and fast forward through the commercials). Currently teams get $30 million a season in national television revenue, soon that number is going to make a big leap. It is rumored that as part of the new deal Fox Sports will enter the national broadcast picture (with TNT and ABC/ESPN) and broadcast at least a game a week (likely Saturday night). The national broadcast rights fees are divided up equally among the 30 teams, so a raise in revenue is coming.

• The lockout was good to the owners. Make no mistake about it, the NBA owners won big in the last lockout. (Some may say it wasn’t enough, but did you ever hear of a really rich person who said, “I’m making enough, I should distribute more of this money to my employees.” Exactly.) The players went from getting 57 percent of the league’s “basketball related income” (money from national television deals, merchandise sales, a percentage of ticket and concession revenues) down to 50 percent. That works out to an estimated $280,000 million a season. That’s nearly $10 million a season more per team going to the owners. With the more strict salary cap and other devises put in place, that CBA made the NBA a good investment for the rich, not just a toy.

• NBA franchise values are already skyrocketing. Since the new CBA went into effect and people who could afford it figured out the NBA was a good investment, the value of NBA franchises has gone through the roof. In 2010 (pre-lockout) Joe Lacob and Peter Guber set the record for money spent to buy a franchise at $450 million for the Golden State Warriors. Since then Vivek Ranadivé led a group that paid $534 million to buy the Sacramento Kings (and they are paying more to get a new stadium built). Just weeks ago hedge fund guys Marc Lasry and Wes Edens spent $550 million to buy the small market Milwaukee Bucks (and they are going to have to put up a lot of money for a new arena, too). Prices for NBA franchises have been going through the roof, and now here comes one on the market in one of the nation’s largest cities, and a team that has been run poorly for decades and has room for growth.

• The frenzied bidding process. We love to watch auctions because they are dramatic. People selling things like auctions because buyers get caught up in the competitive, exciting bidding process and spend more than they maybe should on the item up on the block. That would be the case here — this was a rushed, frenzied bidding process. There are a lot of one percenters who want to get into the NBA club and getting a bunch of them to bid against each other in a rushed process is a good way to get someone to overbid.

51 Questions: Do the Phoenix Suns finally have a playoff formula?

Miami Heat v Phoenix Suns
Leave a comment

PBT is previewing the 2015-16 NBA season by tackling 51 big questions that we can’t wait to see answered once play tips off. We will answer one a day right up to the start of the season Oct. 27. Today’s question:

Do the Phoenix Suns finally have a playoff formula?

It has been five years since the Phoenix Suns made the playoffs, tying the franchise record for longest playoff drought. It’s the fourth longest active drought in the NBA (Timberwolves at 11, Kings at nine, and Pistons at six).

Think about it this way: The Magic, Sixers, and Jazz have been to the playoffs more recently than the Suns.

Phoenix hasn’t bottomed out on a rebuild, they’ve actually been pretty good — they surprised everyone and won 48 games two seasons ago, then had 39 wins last season when things went very wrong and injuries crushed the team after the All-Star break. However, in a deep Western Conference pretty good isn’t good enough.

Suns management and ownership wants that to change. They want back in the playoff dance. Now.

It’s why they went hard after LaMarcus Aldridge this summer, coming in a surprising second to a Spurs team that nobody was likely to catch in that chase.

This summer the Suns made other moves to address needs. They went out and got Tyson Chandler as a free agent. The first reaction was he was there to provide a shot blocking and defensive quarterbacking, two things the Suns sorely lacked. However, just as importantly, they needed a vocal locker room leader, a vacuum that was part of the problem in Phoenix’s implosion last season.

The Suns also needed shooting, they went out and got Mirza Teletovic and drafted Devin Booker.

It’s easy to think the Suns regressed because they lost a lot of talent since the last trade deadline — Goran Dragic, Isaiah Thomas, Gerald Green, Brandan Wright — but they believe the pieces they have now fit together better.

Phoenix believes it can make the playoffs; it thinks it finally has the right formula.

Maybe. They will be in the mix. But a four things have to happen to make that a reality.

First is Chandler has to lead a defensive renaissance on this team. Last season they were average, 17th in the NBA in defensive efficiency, but Chandler can help change that. First, he gives them defensive rebounding that they lacked. He gives them a quarterback that they needed to call things out and have everyone on the same page (reports of how he talks on defense are already pouring out of camp). And he helps protects the paint — that means Eric Bledsoe, Brandon Knight, and P.J. Tucker can pressure the ball more and take risks out on the perimeter knowing Chandler can erase some mistakes.

The second is an obvious one: Bledsoe and Knight need to be able to work well together. They are going to share playmaking duties, and both are going to spend time working off the ball, both need to be ready for that mental adjustment. We haven’t seen that much yet, we need to see how it works out.

Third, there needs to be shooting to space the floor. Bledsoe is a penetrator who is a career 32 percent from three, while Knight shot just 31.3 percent from three after being traded to the Suns (likely due to ankle injuries that required off-season surgery). Those two men will be running the pick-and-roll with Chandler, who sets a good pick, rolls hard and can finish, but doesn’t have shooting range. The Suns other two starters are likely P.J. Tucker, who is not a huge threat from three but shot a respectable 34.5 percent from there last season, and Markieff Morris, who is a career 32.8 percent from three.

If I’m an opposing defense, what’s to keep me from going under picks and packing the lane against the Suns? Phoenix needs Knight to return to the guy who is a career 36 percent from three, they need Morris to improve from the outside, and they need guys like Teletovic and Booker to play key minutes and space the floor at times.

Fourth, and finally, they need the potentially volatile mixture of an unhappy Morris and a coach in Jeff Hornacek in the last year of his contract not to combust. Everyone is saying all the right things at the start of camp, and this is why guys like Chandler and Ronnie Price were brought in, but there is the potential for things to go sideways, especially if some early losses pile up.

The biggest hurdle for the Suns in ending their playoff drought is they are in the Western Conference.

Even if all four of things mentioned above go right for them — if they run and hit more threes plus play better defense — this is likely a 45 win team (give or take a few, and probably take). The problem is that in the West that may not be enough. Barring injuries, there are likely seven lock playoff teams in the West — Spurs, Warriors, Clippers, Rockets, Thunder, Grizzlies, and Pelicans. That leaves the Suns battling teams such as the Jazz, Mavericks and maybe the Kings for that final playoff spot. It may take more than 45 wins, and things are going to have to break the Suns’ way to get there.

Maybe Robert Sarver gets his way and the playoff drought ends this season, it’s more likely than snow in Phoenix this winter. But I wouldn’t bet much on either happening.

LeBron says “get it done” message was for both Cavaliers, Thompson

LeBron James
1 Comment

Everything LeBron James does and says gets magnified and scrutinized.

So when he put out this photo on Instagram standing shoulder-to-shoulder with Tristan Thompson and the caption “get it done” it seemed a message to the Cavaliers.

Get it done!!!! Straight up. #MissMyBrother @realtristan13

A photo posted by LeBron James (@kingjames) on

LeBron clarified that on Sunday, saying this has become a distraction, and the message was for both sides to bend, as reported by Dave McMenamin of ESPN and Chris Haynes of the Plain Dealer.

When Thompson didn’t sign the qualifying offer he surrendered a lot of leverage, the Cavaliers don’t have to raise their five-year, $80 million offer — but reportedly they still would, a little. Thompson and his agent Rich Paul have pushed for a max contract, but that’s not happening.

At some point, the two sides will come to an agreement. For the Cavaliers, this is a distraction, their star is unhappy with that, and ultimately if they are going to make a title run they need the energy and rebounding Thompson brings (even if it is just off the bench). For Thompson, he can’t make up a year of lost salary, he has to come in and start getting paid at some point.

The two sides will get it done. Eventually. Likely before the season tips off.