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

19 Comments

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.

Reports: Phil Jackson attending Shaq statue ceremony, Magic Johnson missing it to scout UCLA-Kentucky

AP Photo/Gus Ruelas
1 Comment

The Lakers are formally unveiling Shaquille O’Neal’s statue outside their arena tonight. Also tonight: UCLA-Kentucky in the Sweet 16, which features NBA prospects Lonzo Ball, Ike Anigbogu, T.J. Leaf, De’Aaron Fox, Malik Monk and Bam Adebayo.

That makes an interesting choice for the NBA’s two highest-profile team presidents – the Lakers’ Magic Johnson and Knicks’ Phil Jackson (who coached Shaq in Los Angeles), both of whose teams are headed toward a high picks in the upcoming draft.

And the front-office heads are going different directions.

Arash Markazi of ESPN:

Marc Stein of ESPN:

Watching a single game in person is unlikely to swing anything. Both Johnson and Jackson could send scouts to watch UCLA-Kentucky live and then the presidents could watch video later.

But attending in person is ideal, and there are already questions about Jackson’s work ethic. This will only fuel them.

If nothing else, this is an opportunity for Johnson, new on the job, to establish an image. He can clearly juxtapose himself with the failing Jackson and establish himself as a diligent alternative. The Lakers hired Johnson at least in part due to his high profile, but that needn’t stop him from grinding now that he has the position. Anyone doubting him would respect that.

Tyreke Evans: Giannis Antetokounmpo is like a taller me

AP Photo/Jeffrey Phelps
Leave a comment

Giannis Antetokounmpo torched the Kings for 32 points, 13 rebounds, six assists and two steals in the Bucks’ 18-point win Wednesday.

Afterward, Sacramento’s Tyreke Evans paid the Greek Freak the ultimate compliment.

Sean Cunningham of ABC 10:

Do you see many players like Antetokounmpo? Evans:

Nah. He like me, but 6-7 – I mean like almost 6-8, 6-7, whatever height he is. He just long, athletic. He get to where he want to go. He got good handle for his size, and he athletic. Once he get around the rim, he can finish.

If only you were an inch taller? Evans:

That’d be a problem. I mean, it’s still a problem, I think, for me to get where I want. But just the athleticism he have and the way he get up off the ground – he got quick bounce. He pretty good at it.

Antetokounmpo is listed at 6-foot-11, Evans 6-foot-6.

This isn’t totally unreasonable. Make Evans five inches taller and add none of the dexterity awkwardness that tends to accompany growth, and he might look a lot like Antetokounmpo. Both are usually slotted at forward while possessing point-guard skills.

But Evans isn’t 6-foot-11, and most 6-foot-11 players can’t move like Antetokounmpo. That fluidity for his size is a big part of what makes Antetokounmpo special. If Evans grew up to be 6-foot-11, he likely would have developed a different skill set than he has now.

Antetokounmpo is the rare player with both the height of a big man and skills of a guard. Evans didn’t miss out on that just because his genes kept him from growing another five inches.

This discussion is also silly for another reason. Somewhere, there’s someone who’s 6-foot-1 and certain he’d be as good as Evans if only he were five inches taller.

Rumor: Blake Griffin increasingly believed to be open to leaving Clippers in free agency

AP Photo/Jae C. Hong
1 Comment

The Clippers were rumored to have already verbally agreed to terms with pending unrestricted free agents Blake Griffin, Chris Paul and J.J. Redick.

But with formal contract extensions unviable, L.A. was always going to have to play out the season and hope those players remained committed into July.

There might be a hitch in that plan.

Kevin Ding of Bleacher Report:

That Griffin would also stay and reap the biggest payday he can seems likely, too—in theory. But more and more people around the league believe he would be open to a fresh start—perhaps with the Lakers or the Boston Celtics, who have coveted Griffin for years and would offer a new chance to win.

Does Ding have credible information to suggest Griffin could join the Lakers or Celtics, or is that just speculation on the writer’s part about potential fits? It’s unclear. This is already fairly loosely sourced.

But we should gather more information quickly once free agency begins. Griffin reportedly planned to re-sign quickly. If he shows the faintest hint of exploring the market, that could open the floodgates.

Griffin had been frequently linked to his home-state Thunder, but Oklahoma City would interfere with his burgeoning Hollywood connections.* The same issue would exist with Boston, though obviously not the Lakers. That said, the Celtics are WAY better than the Lakers – and maybe soon the Clippers and Thunder, considering those Nets picks headed to Boston.

*Oklahoma City also since nuked its cap space with contract extensions for Steven Adams and Victor Oladipo, though trades could always clear room if Griffin wants to come home.

The Clippers are in a bad place right now. One one hand, that forebodes another disappointing end to the season. On the other hand, there’s still time to overcome and send Griffin into free agency on a more positive note.

These are dangerous times for the Clippers, who wouldn’t have cap space to adequately replace Griffin, Paul or Redick if one leaves. So, if one bolts, the others seems more likely to follow. Interpersonal relationships matter, but the Clippers’ primary selling points were always going to be money and winning (with Hollywood proximity a bonus). Winning gets harder if talent walks.

They can still offer the most money, and they’re not leaving L.A. But the Clippers better win more to help avoid what could be a tenser-than-expected summer.

Suns use youngest starting lineup in NBA history

AP Photo/Frank Franklin II
1 Comment

The Suns have shut down their veterans or been shut down by their veterans with two goals in mind – developing young talent and tanking.

Incidentally, Phoenix also made history.

Against the Nets last night, the Suns started:

ESPN:

Elias on ESPN:

The previous youngest was the Clippers’ starting five consisting of guards Eric Bledsoe and Eric Gordon, forwards Al-Farouq Aminu and Blake Griffin, and center DeAndre Jordan, who averaged 21 years and 143 days old in a matchup with the Nets on November 15, 2010.

The young Suns gained quality experience – and helped their team to an important loss, 126-98 to Brooklyn.

Phoenix is still 1.5 games “behind” the Lakers for the No. 2 seed in the lottery, but the Suns are within striking distance in case the Lakers screw up and win too much down the stretch.