WASHINGTON — For the first time in franchise history, the Washington Wizards are valued at more than $1 billion, joining 17 other NBA teams valued at at least 10 figures.
This is also a modest increase on the team’s $960 million Forbes value in 2016.
Unfortunately, however, the Wiz dropped from No. 16 to No. 18 in 2017, falling further behind the $1.36 billion average $1.0625 billion median value.
A team’ value is calculated as a combination of sport, market, arena and brand. Interestingly, the list is headed by the New York Knicks and Los Angeles Lakers, a pair of hopeless inept teams on the court that have managed to brand well over time in two of the biggest media markets in the world.
Driving the sharp increase in team values and player salaries is the new nine-year $24 billion TV contracts signed by the teams last year and a guarantee of seven years of labor peace. That TV contract tripled the previous deal with ESPN and TNT.
The Knicks and Lakers turned $141 million and $119 million in profit, respectively, last season, but the dollars are flowing in across the board. Forbes reports that owners are averaging $31 million in profits. Thanks to a new revenue sharing model, each team can now turn a profit for the first time in modern NBA history.
The best opportunities for the Wizards to increase value are threefold:
- A New Arena: team owner Ted Leonsis made a soft media push to start the conversation about the future of the Verizon Center, one of the few wholly owned facilities in sports, which is costing Leonsis a lot more than most owners that lease. Leonsis owns and foots the bill for the Center–$36 million annually through 2023–a situation that he calls “the worst building deal in professional sports.” He has a point: most other sports teams play in municipally owned venues for between $3 million and $4 million annually.
- Jersey Sponsorship: This won’t be a huge source of income, but the NBA has rolled out a pilot program to allow teams to sign sponsors for the team jerseys, much like those found in professional soccer and NASCAR. These deals will each be at least $4, with teams having full freedom to negotiate up from there.
- Global Audience: The NBA may play second fiddle to the NFL at home, but the greatest chance for growth comes overseas. Last year, the NBA had 1.2 billion unique viewers from around the world, approximately 16 percent of the globe’s 7.4 billion citizens. Look for teams to start focusing on international deals that increase the 8 percent of last year’s revenue gained from international media sources.
Overall, though, the Wizards have nothing to worry about as long as they play well. The Golden State Warriors have continued to benefit from a winning team, rising 37 percent in value again last season to No. 3 on the list. If the Wizards can find sustained success, the marketing will take care of itself.