NBA owner: Expansion fee ‘starting point’ should be $2 billion

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Adam Silver called expansion “inevitable

The NBA commissioner didn’t give a timetable, but current owners are already thinking about the potential windfall.

David Aldridge of NBA.com:

A third NBA owner said the $2 billion price for the Clippers should be “the starting point” for any expansion team’s entrance fee, whether in Seattle or the handful of other cities considered potential candidates for expansion — Las Vegas, Mexico City, Louisville, Kansas City or even Vancouver, which lost the Grizzlies to Memphis in 2001.

“It may sound like a crazy high number now, but so did the Dodgers (who sold for $2 billion in 2012), Clippers and other team sales prices,” the third owner said. “If you can revitalize part of a city or create a world-class arena that draws a new level of cultural events or anchors downtown, then the economics for the real estate dwarf what happens with the team. For someone who has the wealth and wants to leave his or her imprint on a city and state, an NBA team makes perfect sense.”

Does the owner mean the NBA’s opening asking price in a negotiation? Or does he mean the opening, minimum-acceptable bid?

The latter might be a bit optimistic.

The $2 billion Steve Ballmer paid for the Clippers was seen as an overpay by a wealthy buyer who really wanted to own an NBA team. Though the record price doesn’t look ridiculous now, it still might be closer to a high-water mark than the new normal.

Forbes has valued just six franchises at $2 billion or more: Knicks, Lakers, Warriors, Bulls, Celtics, Clippers. But New York, Los Angeles, San Francisco, Chicago and Boston aren’t Seattle, Las Vegas, Mexico City, Louisville, Kansas City or Vancouver. The available markets appear far less lucrative than Los Angeles, where Ballmer’s Clippers play (even if they’re second-fiddle to the Lakers).

The Rockets are for sale, and that should provide another reference point. But Houston is also a fairly large market, not necessarily similar enough to the places an expansion team would land.

It’s fine for current owners to seek $2 billion, but that amount might not be coming.