Forbes has put out their annual NBA team values for 2014 and the Orlando Magic sit right in the middle – ranked 15th in the league. This is impressive considering the Dwight Howard saga and lack of on the court success over the past few seasons. They are valued at $560 million, with $139 million in revenue, and a $12 operating profit.
The Dwight Howard trade really hurt this team financially. According to Forbes, TV ratings on Fox Sports South plummeted 55% and average viewership of 14,000 households was third lowest in the NBA in 2013. This is a result of three factors. Howard fatigue, a lack of a marketable star, and an NBA worst 20 wins.
Not everything went wrong for the Magic. Their deal with Chase helped them set a record for sponsorship revenue and their season ticket sales remained steady at 13,000. This goes to show the hard work and innovation of the business side of the organization, even while the basketball side suffers.
A NBA team’s value is not really contingent on making a profit. In reality, it has more to do with elite performances and demand from other rich owners who want to buy teams. My econometric analysis has shown that the three most important factors of NBA value are location, winning %, and past championships. Profit is a fickle, added bonus, For example, look at the Orlando Magic profit of $12 million. If they weren’t still paying Gilbert Arenas not to play, that number would almost triple.
The NBA’s most audible team for the second straight season is the New York Knicks worth $1.4 billion. In second place, the Los Angeles Lakers are worth an estimated $1.35 billion. And rounding out the top three are the Chicago Bulls, worth $1 billion. Overall, the league has seen rapid growth over David stern’s tenure. According to Darren Rovell, ESPN Sports Business reporter, “the NBA had revenues of $118 million for the 1982-83 season, the last full year before Stern became commissioner. Last year, the NBA’s revenue was $4.6 billion.” We’ll miss you David Stern.
What do you think of the Orlando Magic Forbes value? Where should this team be? Let us know in the comments section below.