Did you see what the Houston Rockets are selling for? Wow!
According to ESPN NBA Insider Adrian Wojnarowski, Houston businessman Tilman Fertitta has agreed to pay Rockets owner Les Alexander a record $2.2 billion for the franchise.
I know everything is supposed to be bigger in Texas. However, if the Rockets are worth that much, everyone with a share of the league – including Charlotte Hornets majority owner Michael Jordan – must be doing well.
That wasn’t always the case. It’s no secret the then-Bobcats lost money the first few years after Jordan bought majority control in 2010. It’s fair to say Jordan and key advisor Curtis Polk made a wise purchase when they bought out most of founding owner Bob Johnson’s interest in the expansion franchise six years after its inception.
Forbes, a nationally prominent business magazine, annually estimates the value of each of the 30 NBA franchises. In February, Forbes ranked the Hornets 28th among 30 NBA franchises with a projected value of $780 million.
Back in December 2009, months before Jordan’s deal with Johnson, Forbes estimated the Bobcats’ value at $278 million. I’m told, by a source familiar with the purchase deal, that the agreed-upon value of the franchise in March was $287 million. Much of Jordan’s obligation was taking over debt on the franchise (as much as $150 million).
That source said Jordan owned roughly 65 percent of the franchise, based on the purchase from Johnson, who continued to own a minority share. It’s likely Jordan owns a larger percentage now, after covering most of the operating deficit his first few seasons in control.
These days, the Hornets have more than 10,000 season-ticket holders. They might be in the low end of franchise values, but it’s apparent Jordan’s patience, and a well-run business operation, has been lucrative.
Is Forbes’ $780 million estimate outdated? Probably. If the Los Angeles Clippers sold to Steve Ballmer for $2 billion and the Rockets are selling for $200 million more than that, I’d think the asking price on the Hornets, with a relatively new arena in a city with a healthy economy, would have to be $1 billion or more.
Not that I have any sense Jordan would look to sell. His ownership of the Hornets has been called a “legacy” investment, as in something multi-generational. His daughter, Jasmine, works for the team with the title “Coordinator of Basketball Operations.” That sounds like management training.
The Bobcats/new Hornets have yet to win a playoff round, but the business side has done well on the watch of president Fred Whitfield and chief marketing officer Pete Guelli.
The qualifier in all this is prosperity for some NBA franchises won’t necessarily raise others as much as it would in the NFL. The NBA has national television contracts (which raised the salary cap significantly in the summer of 2016) and some revenue sharing. But that’s not on a scale with the NFL, where every game is televised by a national network and there is aggressive revenue sharing that has included some gate receipts.
So it’s not automatic the Rockets selling for $2.2 billion means a bump for Jordan and his minority partners. The Rockets have two past NBA championships, plus two marketable stars in guards James Harden and Chris Paul.
But, even by conservative estimate, Jordan has roughly tripled the franchise’s worth. No small turnaround in the space of seven years.
Top 10 value rankings
Forbes annually ranks the value of each of the NBA’s 30 franchises. They last published a ranking last February. A snapshot of the top 10 franchises by ranking (the Charlotte Hornets were 28th at an estimate of $780 million).
1. New York Knicks: Value: $3.3 million. Situation: Madison Square Garden has completed a major renovation. Phil Jackson – a big miss as a basketball executive – is gone. Small forward Carmelo Anthony is still there with a no-trade clause.
2. Los Angeles Lakers: Value $3 billion. Situation: Despite four losing seasons, the Lakers still are more popular than the Clippers, and might still be the most popular franchise in Southern California.
3. Golden State Warriors: Value: $2.6 million. Situation: The Warriors have won two of the past three championships and have two of the league’s superstars in Stephen Curry and Kevin Durant. They plan to move into a new arena in San Francisco.
4. Chicago Bulls: Value: $2.5 million. Situation: They are rebuilding, having traded Jimmy Butler to Minnesota for youth. Bulls fans support this team through down seasons.
5. Boston Celtics: Value $2.3 billion. Situation: They had the best regular-season record in the Eastern Conference. Have acquired All-Stars Kyrie Irving and Gordon Hayward.
6. Los Angeles Clippers: Value: $2 billion. Situation: Owner Steve Ballmer would like to stop sharing an arena with the Lakers. Losing Chris Paul is a big hit to this team’s star power.
7. Brooklyn Nets: Value: $1.8 billion. Situation: A big-time market, even as the Knicks’ little brother, but the Nets haven’t put on much of a product lately. Will D’Angelo Russell make much difference?
8. Houston Rockets: Value: $1.65 billion. Situation: Owner Les Alexander has reportedly gotten an offer of $2.2 billion after putting this team up for sale. Paul and James Harden are headliners.
9. Dallas Mavericks: Value $1.45 billion. Situation: Mark Cuban is bold and innovative as an owner, creating a sense of community in a football-centric city.
10. Miami Heat: Value: $1.35 billion. Situation: Pat Riley’s intense leadership and Miami’s attractiveness as a free-agent destination has produced multiple championships.