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On Monday, Sportico released a report on NBA team valuations. Three NBA teams are worth a total value over $5 billion each in this order: The New York Knicks, Golden State Warriors and Los Angeles Lakers. All three teams are in large markets and all three teams bring in among the most local revenue in the league.
The Washington Wizards tied for No. 13 overall with a valuation of about $2.05 billion, tied with the San Antonio Spurs. The ranking shows where Washington is showing its potential and where it is falling short.
The Wizards rank 21st in revenue
Sportico broke down team valuations based on revenue, and how much value the team has in other side businesses or real estate. Revenue included national sources which are from broadcasting deals and league sponsorships and local ones such as arena naming rights and ticket sales. The Wizards were among the bottom third of all teams based on the amount of money they bring in.
Given that Washington is a big market, this indicates that Washington is underperforming locally. From ticket sales, I think we can see that they lag behind the league average in attendance and were 28th in the league for arena utilization last season. Also, if you are a season ticket holder, though you may be complaining about ticket prices, but they are also below the league average. I mean .... they are one of the best values in the NBA from a dollars and cents perspective.
The Wizards are fifth in team-related businesses and real estate
The Wizards have about $319 million in team related businesses and real estate, good for fifth in the NBA, behind the Warriors, Knicks, Brooklyn Nets and Lakers in that order. This is where Washington is punching its weight.
Washington does well with these businesses because Monumental Sports & Entertainment, the Wizards’ ownership group owns Capital One Arena, the team they play in. They also have an equity stake in NBC Sports Washington, the regional sports network that carries their games. And if that weren’t enough, Monumental Sports Network also helps with the Wizards’ OTT presence in the form of additional video content that can be streamed on mobile devices and/or smart TVs.
It should be known that many NBA teams, including the Spurs, don’t have any value in team-related businesses. This is partly because they do not own the AT&T Center and lease from the local government instead.
What does this mean?
This report confirms what many think of the Wizards as a business. They aren’t the be-all, end-all asset for principal owner Ted Leonsis. They are part of a bigger entity in Monumental Sports that can bring more value than a team can alone.
Monumental Sports is run quite well from the standpoint of asset diversification. MSE wants to have as much control over their media rights and where they play. Owning Capital One Arena means that MSE can make money every time there’s an event there, not just when the Wizards, Washington Capitals or Washington Mystics are. And having a stake in NBC Sports Washington gives the team more influence about who gets on the airwaves and when.
As far as the Wizards themselves? The team can use more work there with ticket revenue though they probably are doing well with sponsorships.
Raising ticket prices can also raise revenue to a point, but they also don’t want to price out long-term fans and raising prices too much will also drop overall revenue. However, since the Wizards may be on the verge of a full-scale rebuild due to their 3-8 record and will have to eventually welcome fans back after the coronavirus pandemic, it’s difficult to see how much additional ticket revenue they can get. As for sponsorships, the Wizards should be just fine given that Washington is a big market.