In a report this week, Forbes formally confirmed what the NBA world has known since Steve Ballmer bought the Clippers for $2 billion; NBA teams are worth a shitload of money. Specifically, three teams are worth more than what Ballmer paid and the average team valuation is over $1 billion, a 72 percent increase over last year's numbers. These numbers are almost certainly wrong, since they're based on an incomplete data set, but if anything, they're too conservative.
Every franchise sold in the past five years has eclipsed Forbes' predicted price, including those on the fringes of NBA relevancy like the Sacramento Kings and the Milwaukee Bucks. There are only 30 NBA teams, and like Cezanne paintings or huge truffles, their scarcity ensures a high price. Even before you factor in the obvious, flashy, non-business benefits of ownership, a team makes sense as an investment, which is essentially what the Brooklyn Nets are to Mikhail Prokhorov.
But with 10-digit sale prices to be expected going forward and a TV deal that will bring in $24 billion over nine years, the poverty case that NBA owners made during the 2011 lockout looks like the thin facade it always was. They won the lockout and took 8 percent* of basketball revenue away from players because they were able to hide how much they made. NBA commissioner Adam Silver is still claiming that one third of all NBA teams are losing money, but this time, nobody is buying it. Even if official revenue figures have divots taken out of them for political reasons, the incoming TV money and looming billion(s) negate management's go-to argument.
Naturally, players will want and likely get a bigger cut of basketball revenue, but the gaudy valuation data also exposes one of the NBA's most sinister practices for what it is: predatory capitalism. It's somewhat of a tradition for new ownership groups to hold their cities over the relocation fire unless they fork over hundreds of millions for a new stadium. Sacramento's new owners, deep-pocketed as they were, did it. Prokhorov's group did it by using eminent domain provisions to kick out 22 acres worth of residents to build the Barclays Center. Simply put, cities kowtow to billionaire owners because, with Seattle looming as a relocation destination, their teams could always be taken to what owners will sell as greener pastures.
The result is that American sports teams have a strange relationship with civic life. They matter to their fans and cities for plenty of reasons, but mechanically speaking, they belong to owners. Rather than acknowledge the symbiotic relationship between fan and team, owners tend to exploit it and leverage fan investment against cities. No city wants to be the next Seattle, which saw their team walk after not doling out public money. So they pony up, seduced by the nonsensical logic of billionaires. Owners hide their coup under the guise of mutually beneficial urban development, claiming that civic money's tortuous path to their wallets is best for everyone. More civic infrastructure and money flowing to more people are good ideas, but not when that money has to filter through a massively wealthy owner before it gets put to use.
If NBA teams are worth billions, it's farcical that cities should be held ransom by owners. No citizens are obligated to help the rich get richer. NBA players have a similar experience with getting hustled by the league, but there are ample signs that they've chosen 2016 as the time to fairly realign the balance of power. Adam Silver and the rest of management will find some way to fight for more money, but a rubicon of sorts has been crossed. The public is starting to learn not just how much money team owners have, but the lengths they'll go to in the name of getting more. The next step is fighting back, hopefully.
*Editor's note: The original version of this article misstated this figure as 10 percent.