OT - You can't afford the NBA anymore and thats by design

[Westside Gunn]

Watch on YouTube

Not sure how reputable this channel is or the content creator but interesting analysis.
Is this true at least for Toronto and other arenas you ahve been to?

Haven't been to a game for a long time now. They are making league pass and cable TV more expensive.

Too Long Didn't watch: The NBA is phasing out the regular fan experience in the areas and making it more of a bougie/luxury experience for the casual fan. Creator cites NY, Brookyln, and Golden State

[Tor_Raps]

NBA player salaries arent skyrocketing because theyre handing out discounts. The cost gets passed onto the consumer.

I'm shocked people have been paying for it considering the big F U's players/management give the fans with load management tbh.

[brownbobcat]

Anybody that's looked at ticket prices recently knows what's going on.

Frankly, I think they're going to kill the golden goose sooner rather than later and it's for the exact reason stated. If you take passionate fans for granted and price them out, you're going to start losing them. And then that next generation of boujee/rich fan isn't going to care about the NBA at all.

[tecumseh18]

Yeah, I gave up my seasons tickets last summer after they jacked up the price by about 35% over the previous two (crappy) seasons. I thought maybe they're just trying to make up for the losses over Covid. But it's obviously more than that.

[Mikistan]

Yeah, I gave up my seasons tickets last summer after they jacked up the price by about 35% over the previous two (crappy) seasons. I thought maybe they're just trying to make up for the losses over Covid. But it's obviously more than that.

Same here!

[Harcore Fenton Mun]

Revenue's shrinking, the fan base is shrinking. It's the product, it sucks right now.

[YogurtProducer]

Revenue's shrinking, the fan base is shrinking. It's the product, it sucks right now.

Well, other than the complete opposite is what is actually happening.

[Harcore Fenton Mun]

Revenue's shrinking, the fan base is shrinking. It's the product, it sucks right now.

Well, other than the complete opposite is what is actually happening.

People are getting laid off, inflation is problem. The whole "people have tuned out" was the theme of last year.

[JB7]

They will end up just pumping fan noises into the arena to replace the real fans.

But what this also means is teams in small markets are at risk, because they can’t compete with the revenue potential of the larger markets.

Are we going to see more smaller market teams moved to larger markets?

[deck]

Revenue's shrinking, the fan base is shrinking. It's the product, it sucks right now.

Well, other than the complete opposite is what is actually happening.

People are getting laid off, inflation is problem. The whole "people have tuned out" was the theme of last year.

Yes, people are getting laid off. Yes, inflation is a problem. Yes, people tuned out last year because we were tanking.

But no, revenues are not shrinking, and no, the fan base is not shrinking.

https://www.sportsvalue.com.br/en/nba-teams-surpassed-us-11-3-billion-in-revenue-in-2024-total-valuation-reached-us-132-8-billion/

By pretty much any source I can find, the NBA in the past decade, apart from the pandemic, is in it's by far most successful era. International growth being a material contributing factor.

Generally speaking, owners don't care exclusively about revenue, they care about valuation. And while those two things are related, they are not correlated.

[Harcore Fenton Mun]

Well, other than the complete opposite is what is actually happening.

People are getting laid off, inflation is problem. The whole "people have tuned out" was the theme of last year.

Yes, people are getting laid off. Yes, inflation is a problem. Yes, people tuned out last year because we were tanking.

But no, revenues are not shrinking, and no, the fan base is not shrinking.

https://www.sportsvalue.com.br/en/nba-teams-surpassed-us-11-3-billion-in-revenue-in-2024-total-valuation-reached-us-132-8-billion/

By pretty much any source I can find, the NBA in the past decade, apart from the pandemic, is in it's by far most successful era. International growth being a material contributing factor.

Generally speaking, owners don't care too much about revenue, they care about valuation. And while those two things are related, they are not correlated.

Yes, but when rates go up. Valuations tend to go down.

They did get a big boost from gambling, but we all see that isn't working. People notice games being fixed.

[deck]

People are getting laid off, inflation is problem. The whole "people have tuned out" was the theme of last year.

Yes, people are getting laid off. Yes, inflation is a problem. Yes, people tuned out last year because we were tanking.

But no, revenues are not shrinking, and no, the fan base is not shrinking.

https://www.sportsvalue.com.br/en/nba-teams-surpassed-us-11-3-billion-in-revenue-in-2024-total-valuation-reached-us-132-8-billion/

By pretty much any source I can find, the NBA in the past decade, apart from the pandemic, is in it's by far most successful era. International growth being a material contributing factor.

Generally speaking, owners don't care too much about revenue, they care about valuation. And while those two things are related, they are not correlated.

Yes, but when rates go up. Valuations tend to go down.

They did get a big boost from gambling, but we all see that isn't working. People notice games being fixed.

Valuations are not going down. What source are you looking at which is suggesting that?

Everything I can find suggests valuations are massively up in the past 10 years. Last year alone Forbes is estimating league average valuations are up 15%.

https://www.statista.com/statistics/193442/average-franchise-value-in-the-nba-since-2000/

For the Raptors, even with us tanking / being bad since the championship, our valuation is significantly up.

https://www.statista.com/statistics/194739/franchise-value-of-the-toronto-raptors/

Income and revenue has taken a hit, in a big part due to pandemic, but still up over the time frame.

https://www.statista.com/statistics/196772/revenue-of-the-toronto-raptors/
https://www.statista.com/statistics/286101/operating-income-toronto-raptors-national-basketball-association/

[Harcore Fenton Mun]

Yes, people are getting laid off. Yes, inflation is a problem. Yes, people tuned out last year because we were tanking.

But no, revenues are not shrinking, and no, the fan base is not shrinking.

https://www.sportsvalue.com.br/en/nba-teams-surpassed-us-11-3-billion-in-revenue-in-2024-total-valuation-reached-us-132-8-billion/

By pretty much any source I can find, the NBA in the past decade, apart from the pandemic, is in it's by far most successful era. International growth being a material contributing factor.

Generally speaking, owners don't care too much about revenue, they care about valuation. And while those two things are related, they are not correlated.

Yes, but when rates go up. Valuations tend to go down.

They did get a big boost from gambling, but we all see that isn't working. People notice games being fixed.

Valuation are not going down. What source are you looking at which is suggesting that?

Everything I can find suggests valuations are massively up in the past 10 years. Last year alone Forbes is estimating league average valuations are up 15%.

https://www.statista.com/statistics/193442/average-franchise-value-in-the-nba-since-2000/

For the Raptors, even with us tanking / being bad since the championship, our valuation is significantly up.

https://www.statista.com/statistics/194739/franchise-value-of-the-toronto-raptors/

Income and revenue has taken a hit, in a big part due to pandemic, but still up over the time frame.

https://www.statista.com/statistics/196772/revenue-of-the-toronto-raptors/
https://www.statista.com/statistics/286101/operating-income-toronto-raptors-national-basketball-association/

Peak was Bos selling, it's not going up from there. At least not soon. Rates have gone up. Even rich people need credit.

[ForeverTFC]

Yes, but when rates go up. Valuations tend to go down.

They did get a big boost from gambling, but we all see that isn't working. People notice games being fixed.

Valuation are not going down. What source are you looking at which is suggesting that?

Everything I can find suggests valuations are massively up in the past 10 years. Last year alone Forbes is estimating league average valuations are up 15%.

https://www.statista.com/statistics/193442/average-franchise-value-in-the-nba-since-2000/

For the Raptors, even with us tanking / being bad since the championship, our valuation is significantly up.

https://www.statista.com/statistics/194739/franchise-value-of-the-toronto-raptors/

Income and revenue has taken a hit, in a big part due to pandemic, but still up over the time frame.

https://www.statista.com/statistics/196772/revenue-of-the-toronto-raptors/
https://www.statista.com/statistics/286101/operating-income-toronto-raptors-national-basketball-association/

Peak was Bos selling, it's not going up from there. At least not soon. Rates have gone up. Even rich people need credit.

NBA franchises aren't your normal assets.

For one, NBA teams can only carry up to $475m of secured debt, so if an owners wants to take on more debt, they would have to take it out against other assets (which they don't) or bring in more equity partners (which they do). And while it's true that the cost of capital has gone up, over the last 5 years the NBA opened up new sources of capital to the owners: PE/institutional funds can own up to 20% in any 1 franchise and 30% in aggregate across the league while Sovereigns can now own up to 5% in any NBA franchise. It's worth noting that we are seeing record valuations during the highest rate environment of the last decade. Will valuations keep going up? Who knows. But what you said about the recent past is factually incorrect.

[YogurtProducer]

Revenue's shrinking, the fan base is shrinking. It's the product, it sucks right now.

Well, other than the complete opposite is what is actually happening.

People are getting laid off, inflation is problem. The whole "people have tuned out" was the theme of last year.

And this has nothing to do with the NBA in any way.

NBA is completely heathy and I don’t know what about being laid off has to do with a fan bad shrinking.

[Harcore Fenton Mun]

Valuation are not going down. What source are you looking at which is suggesting that?

Everything I can find suggests valuations are massively up in the past 10 years. Last year alone Forbes is estimating league average valuations are up 15%.

https://www.statista.com/statistics/193442/average-franchise-value-in-the-nba-since-2000/

For the Raptors, even with us tanking / being bad since the championship, our valuation is significantly up.

https://www.statista.com/statistics/194739/franchise-value-of-the-toronto-raptors/

Income and revenue has taken a hit, in a big part due to pandemic, but still up over the time frame.

https://www.statista.com/statistics/196772/revenue-of-the-toronto-raptors/
https://www.statista.com/statistics/286101/operating-income-toronto-raptors-national-basketball-association/

Peak was Bos selling, it's not going up from there. At least not soon. Rates have gone up. Even rich people need credit.

NBA franchises aren't your normal assets.

For one, NBA teams can only carry up to $475m of secured debt, so if an owners wants to take on more debt, they would have to take it out against other assets (which they don't) or bring in more equity partners (which they do). And while it's true that the cost of capital has gone up, over the last 5 years the NBA opened up new sources of capital to the owners: PE/institutional funds can own up to 20% in any 1 franchise and 30% in aggregate across the league while Sovereigns can now own up to 5% in any NBA franchise. It's worth noting that we are seeing record valuations during the highest rate environment of the last decade. Will valuations keep going up? Who knows. But what you said about the recent past is factually incorrect.

They have to pay more to service debt, so they have less to spend. Like, if the group who bought the Celtics had to use current rates, maybe they don't qualify. Maybe they can only afford Charlotte now. Maybe they just don't tender that offer now.

[Tripod]

Well, other than the complete opposite is what is actually happening.

People are getting laid off, inflation is problem. The whole "people have tuned out" was the theme of last year.

And this has nothing to do with the NBA in any way.

NBA is completely heathy and I don’t know what about being laid off has to do with a fan bad shrinking.

Seems like someone wants to disagree with things just to disagree.

[Troubadour]

The aim seems to be getting the average fan to spend the same amount of money going to to fewer games.

[Harcore Fenton Mun]

It'll be interesting to see how it plays out with international tourism going away.

[ForeverTFC]

Peak was Bos selling, it's not going up from there. At least not soon. Rates have gone up. Even rich people need credit.

NBA franchises aren't your normal assets.

For one, NBA teams can only carry up to $475m of secured debt, so if an owners wants to take on more debt, they would have to take it out against other assets (which they don't) or bring in more equity partners (which they do). And while it's true that the cost of capital has gone up, over the last 5 years the NBA opened up new sources of capital to the owners: PE/institutional funds can own up to 20% in any 1 franchise and 30% in aggregate across the league while Sovereigns can now own up to 5% in any NBA franchise. It's worth noting that we are seeing record valuations during the highest rate environment of the last decade. Will valuations keep going up? Who knows. But what you said about the recent past is factually incorrect.

They have to pay more to service debt, so they have less to spend. Like, if the group who bought the Celtics had to use current rates, maybe they don't qualify. Maybe they can only afford Charlotte now. Maybe they just don't tender that offer now.

1) The Celtics were just bought
2) Rates are going down, not up - the fed last cut rates in Dec last year and the market is pricing in at least 1 cut this year
3) As I already mentioned, the most debt any team can carry (secured against the franchise) is $475m which would only be ~8% of the Celtics purchase price
4) There is no indication that Chisolm and his group took out any debt against the franchise to fund the purchase with all indications being that the $6.1b (really ~$3b given they bought 51%) was funded through equity from Chisolm, Sixth Street and other equity partners - though there are questions about the equity structure that I haven't really found a good explanation for

The days of purchasing an NBA franchise largely financed through debt (which is how the Celtic's former owners purchased the Celtics in 2002) is over in the NBA. You can't lever up a franchise purchase under current rules: average valuations are are at ~$4.5B, controlling owner must own at least 15% personally, and teams are allowed $475m in max secured debt. And as I explained previously - while cost of capital has gone up, the NBA has opened up new sources of equity for owners which gives them a larger pool of capital to tap into.