The latest estimate of the value of the Brooklyn Nets is out. CNBC has the team at $5.6 billion, sixth in the NBA.
CNBC is out with the latest estimate of the Brooklyn Nets value and like Sportico and Forbes before it, the outlet puts the Nets in the first rank of the NBA’s franchises with an estimated valuation of $5.6 billion. That figure ranks them sixth behind the Golden State Warriors, New York Knicks, Los Angeles Lakers, Chicago Bulls and Houston Rockets. Other than the Big Three of Golden State, New York and the Lakers, the rest of the group are all within $200 million of each other.
CNBC is new to the valuation game, but Mike Ozanian, who built the rankings database previously worked on Forbes rankings.
The valuations are, of course, estimates and with the rising tide of pro sports transactions they’re often overtaken by events. Sportico for example had suggested in December 2023 that the Nets was the slowest growing franchise in the NBA … only to see members of the Koch family, led by Julia Koch, the world’s third richest woman, lay down nearly $700 million for a 15% stake months later, vaulting the real value by nearly $2 billion.
Although Ozanian and CNBC didn’t specifically discuss the basis for the Nets valuation in their report, there were some interesting numbers in the table at the center of the story. No team in the top six had as low a revenue stream as the Nets, at $389 million nor as low an EBITDA (earnings before interest, taxes, depreciation and amortization) of $78 million as the Nets. And no team in the league, they claimed, carries as high a debt load as a percentage of valuation as the Nets at 16%.
There’s also a bit of apples and oranges in the valuations. In the Nets case, for example, the the team and the Barclays Center operating company (the arena is actually owned by the state) are included in the CNBC estimate, but not the New York Liberty, owned the same entity, BSE Global. That’s one reason why its valuation is a bit more than the Celtics which doesn’t own TD Bank Arena in Boston. As Ozanian writes:
[Valuations] do not include the value of equity stakes in non-NBA businesses, such as regional sports networks and Women’s National Basketball Association teams. For example, we include the $57 million rights fee NBC Sports Boston paid the Celtics last season but exclude the $13 million equity income the RSN paid the Celtics.
The CNBC valuation does take into account winning … and stars … with Ozanian writing of the Warriors:
It may not be surprising that the value of the Warriors has increased at a 24% compound annual growth rate since Joe Lacob and Peter Guber paid $450 million for the team in 2010. After all, the Warriors have won four NBA titles over the past decade, moved into their state-of-the-art arena in 2019 and have been led by two-time league MVP Stephen Curry.
The Nets, of course, haven’t done a lot of winning of late and lost the Big Three of Kevin Durant, Kyrie Irving and James Harden (something more than a fans blame on Joe Tsai.)
While Nets parent company, BSE Global, has historically been shy about responding to estimates, Norman Oder, the critic and chronicler of Atlantic Yards, the area surrounding Barclays Center, offered some insight Wednesday into several aspects of the CNBC valuations, in particular the debt load.
In writing about the June 2024 purchase by the Koch family, Sportico noted that $492 million of the $688 million the Kochs paid the Tsais will be used to pay down debt, Oder writes that money was likely used to pay down team debt while the Barclays Center debt remains.
If the Nets and arena are valued at $5.6 billion and debt is 16% of value—the highest in the league—that suggests a remaining debt of $896 million.
That’s in the ballpark for the remaining arena debt … (Some of the Koch investment was said to have helped pay off debt, likely with the Nets rather the arena.)
Again, not every franchise owns its own arena or arena operating company. More apples and oranges.
Bottom line for Joe and Clara Wu Tsai is that they have been very successful in their sports investments. Between buying 49% of the Nets from Mikhail Prokhorov in April 2018, then adding the New York Liberty in January 2019, completing the purchase of the team and adding Barclays Center in October 2019, the Tsais have laid out around $3.2 billion for everything including about $10 to $14 million (with an “m”) for the Libs. That’s about a 75% jump in their investment over less than seven years.
Their best investment is probably the Liberty which may not be included in Ozanian’s estimate, but was valued at $200 million for the purposes of the Koch deal back in June. That was before the WNBA championship and before the recent expansion of the W which is requiring prospective owners to lay out a $250 million entry fee. So that $200 million is probably outdated.
Indeed, the Tsai “family office,” aka investment vehicle, Blue Pool Capital, has been upping its sports and entertainment portfolio, having recently purchased a three percent interest in the Miami Dolphins of the NFL, an undisclosed minority interest in the Brooklyn Paramount theatre, a 12% piece of Golden Goose, an Italian footwear company known for its $600 a pair sneakers, etc. More spending is likely as BSE Global plans to make Barclays Center a “destination” with things like a a hotel, conference center, clubs, artists spaces, etc.
Oliver Weisberg, who runs Blue Pool, has called sports a separate and valuable asset class.
“When I think about about my marginal dollar today,” Asian Investor quoted Weisberg, who’s also an alternate governor of the Nets, last August, “Sports is at the top of the list. Sports has become an actual asset class now.”
How does this affect the Nets? Joe Tsai has a record of spending, having laid out $323 million in luxury taxes since buying into the team and after the sale of the minority stake announced a five-year, $100 million plan to “enhance fan experience at the Brooklyn arena.”
Now if he can like Clara has with the Liberty, both they and the fans will benefit.
- CNBC’s Official NBA Team Valuations 2025: Here’s how the 30 franchises stack up – Mike Ozanian – CNBC
- CNBC: Brooklyn Nets (and arena company) worth $5.6 billion, sixth in NBA. Increase in media rights offers rising tide for all. Koch investment key. – Norman Oder – Atlantic Yards/Pacific Report
and $196 million for working capital including more than $100 m