Forbes magazine and the economics of the NBA

As I mentioned Wednesday, Forbes magazine came out with its list of the most valuable NBA teams. According to Forbes, the Lakers are worth $584 million (second only to the New York Knicks at an estimated $613 million), and the purple and gold had $47.9 million in operating income, the second-best among 30 NBA clubs.

Meanwhile, the Clippers were estimated to have $10.7 million in operating income on revenue of $99 million. The magazine pegs the value of Donald Sterling's team at $297 million, a lowly 25th on the list. The least valuable team on Forbes' list was the Milwaukee Bucks at $278 million.

Forbes estimates that 10 of the league's 30 teams are generating operating losses. Here's a breakdown of Forbes' top- and bottom-feeders:

Top five NBA teams (profit from operations):

1. Chicago Bulls ($55.4 million)

2. Lakers ($47.9 million)

3. Detroit Pistons ($40.4 million)

4. Houston Rockets ($31.2 million)

5. New York Knicks ($29.6 million)

Bottom five NBA teams (loss from operations)

1. Denver Nuggets (-$26.3 million)

2. Dallas Mavericks (-$13.6 million)

3. Oklahoma City Thunder (-$9.4 million)

4. Indiana Pacers (-$6.5 million)

5. Minnesota Timberwolves (-$5.7 million)

-- Barry Stavro

Photo: Lakers head coach Phil Jackson, left, listens to Kobe Bryant during a time out on Wednesday night. The Lakers beat the 76ers 114-102.  Credit: Tom Mihalek / Associated Press

Comments

[daniel]

the 'profit from operations' part of that Forbes breakdown makes the least sense. If profits coming to the teams come directly from overhead +/- advertising, television revenue, ticket sales, etc; well, sure. But that can't really be calculated from franchises that own their buildings and especially own their own television networks, like NY, whose relatively poor local television ratings (in response to a bad team) are offset by ownership owning the MSG NETWORK in the nation's largest television market. Therefore, the Knicks are probably actually too conservatively valued as the NBA's richest franchise at $600 million plus (remember, they own their own arena, in the middle of Manhattan, that would sell for at least $700 million to a Billion dollars, if it were for sale.) And therefore, that "profit from operations" list is meaningless, and not the information that's valid in the Forbes list, if the list matters at all to basketball fans.

[Raffy]

If you were to look at a P&L of any company, the assets are not listed in the P&L but in the balance sheet. Why should Forbes list the value of the stadium in the P&L then?

To me, it's interesting to know that my favorite team (Lakers) is being run in a profitable manner.