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.

Kobe Bryant went from DeMar DeRozan’s idol to his friend

Kobe Bryant, DeMar DeRozan
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TORONTO (AP) — DeMar DeRozan was 16 when he was invited to Kobe Bryant‘s camp for the top 25 American high school shooting guards.

A friendship grew between the youngster who would become an All-Star for the Toronto Raptors and the player who would become the third-leading scorer in NBA history.

DeRozan talked at length Sunday night about Bryant, who announced on The Players’ Tribune that he’ll retire after the season, capping a 20-year NBA career.

“The knowledge that he tended to give me every time I got the chance to be around him, especially at a young age, carrying over to the league, it was definitely an honor,” DeRozan said after the Raptors’ 107-102 loss Sunday night to Phoenix. “I tried to listen as much as possible, soak in as much as I could all of the time. It’s crazy how much time flies.”

Bryant was DeRozan’s favorite player while growing up in Compton, Calif.

“I’ve tried to emulate and learn so much from him ever since I was a kid, watching every single game growing up in Los Angeles, having a chance to get with him and learn from him, from conversations even when I was in high school from playing against him, completing against him, being in big games with him,” said DeRozan, who scored 29 points in Sunday’s loss. “It’s definitely a sad, sad day, but he’s been in the game a long time.”

Bryant’s announcement came just before the Lakers’ game against the visiting Indiana Pacers. Fans at the game received a letter of thanks from the 37-year-old player in a black envelope embossed with gold.

Bryant has struggled mightily with injuries the past several years, and is shooting a career-worst 32 percent this season.

“It don’t matter. That man has five rings, 17 all-stars, MVP,” DeRozan said. “There’s nothing he hasn’t done. It’s just father time catching up with him, injuries catching up with him this past year. People will appreciate it when he’s away from the game.”

DeRozan has his favorite Kobe memory – Bryant scoring 81 points against Toronto in 2006. DeRozan, who would join the Raptors as a rookie three years later, said he felt as if he was playing a video game watching the high-scoring spectacle unfold on TV.

DeRozan is in his seventh season with Toronto. He can’t imagine playing 20 years.

“Especially playing at a high level, doing the things he was doing … people don’t understand how hard that is,” DeRozan said. “Even now, a lot of us find ourselves tired (on) back-to-backs. It’s tough. It’s really tough. To do it 20 years at a high level, you have to give that man every credit in the world.”

Hornets’ Al Jefferson out 2-3 weeks with strained calf

Al Jefferson
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The Hornets have been playing well of late, going 7-3 in their last 10 and outscoring opponents by 6.3 points per 100 possessions. They are solidly in the playoff picture out East, in the six slot right now.

This is not going to help matters.

The team announced that an MRI confirmed center Al Jefferson will be out two to three weeks with a strained left calf muscle, suffered during Charlotte’s 87-82 win over Milwaukee on Sunday.

Jefferson missing a few weeks due to injury at some point during the season is an annual event, like the Rose Parade or the Head of the Charles Regatta — but this year the Hornets are better prepared to deal with it. This is the deepest Charlotte team in recent memory.

Tyler Hansbrough, Cody Zeller, and Frank Kaminsky will get more run — plus Spencer Hawes may be back in the rotation — and if they can step up the Hornets will not slow down much.

This season the Hornets defense has been downright stingy when Jefferson is on the bench, giving up 94.2 points per 100 possessions (which is 10 better than when he is on the court). However, the Hornet offense and rebounding efforts are stronger when he plays.

PBT Extra: How did Thunder, Pacers move up in PBT Power Rankings?

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As they do every Monday during the season, the PBT Power Rankings came out and while the top three remained the same there were some climbers.

Specifically, the Thunder at No. 4 and the Pacers at No. 5.

Why they are there is the latest PBT Extra topic with Jenna Corrado. The simple answer is they are both excellent teams. Russell Westbrook, Kevin Durant, and Paul George are all playing like Top 10 players.

PBT Podcast: We’re back talking Kobe, 76ers, Warriors, Pistons, more

Kobe Bryant
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The ProBasketballTalk NBA podcast is back.

Sure we’re a month into the season, but we’re going to get this podcast rolling again and you can expect us on each Monday and Thursday, with a variety of guests talking everything around the NBA.

Today NBC’s own Dan Feldman joins Kurt Helin to talk Kobe Bryant‘s retirement announcement, and what that means both for the Lakers going forward this season and beyond, but also what that could mean for Byron Scott’s future as the Lakers’ coach.

We also delve into the “showdown” between the Lakers and Sixers on Thursday, talk about the job Brett Brown is doing there as coach (a good one), we talk some Warriors, some Draymond Green, Pistons, Spurs and Pacers to round it all out.

Listen to the podcast below or you can listen and subscribe via iTunes.