The NBA Franchise

The National Basketball Association was established in 1946 as the Basketball Association of America. This name was adopted in 1949 after the incorporation of the teams from the national basketball league. There has been a major evolution with the running of clubs in NBA that has seen growth in revenue and also in stature of clubs. The NBA brand has become an important revenue generator for the clubs, owners and the government. NBA started off with 17 franchises, but the number reduced to 11. The franchises formed the foundations for what have become Lakers, Knickerbockers, Celtics, Hawks, Warriors, Detroit Pistons, National/Sixers and Royals/Kings. It then improved in numbers in 1966-68 with the addition of Chicago Bulls, Suns, Rockets, Bucks and Supersonics currently known as thunder. NBA has since grown in stature and is one of the most lucrative businesses for investment.

NBA franchise like Atlanta Hawks makes a lot of money. The revenue is generated mainly through annual ticket sales. The injection from the TV endorsement and sporting companies like Nike and Adidas contribute to increasing in the money franchises make. Buying and selling of franchises a very costly affair considering the money in question.

  1. Bruce Levenson a known business person with an interest in United Communications Group (UCG), Atlanta Sprits, LLC used to own the Atlanta Hawks and all the operating rights to Philips Arena. Bruce and his partners had acquired the club from Times warner for a tune of $ 200 million in 2004. However, the club whose value at some point was estimated at $425 million and ranked 27th out of the 30 NBA franchises was sold for around $800 million. The sale proved a shrewd investment for Mr. Levenson and company considering the meager amount they had invested in 2004.The value of clubs in the NBA franchise has skyrocketed in the recent past. The business is very lucrative considering the returns it’s bringing to the owners. Atlanta Hawks value was rank 27th out 30 in NBA and still managed to attract an investor willing to buy it for $800 million. Secondly, the average team value in the NBA is averaging at $1.1 billion. This valuation is putting into considerations factors like new media links, arenas, player’s value, and sponsorship deals and partnerships. Walt Disney through ESPN and Time Warner through TNT have injected $2.5 billion annually for the next 9 years dwarfing the current deal worth $897. The deal which will commence in the 2016-17 season has shaken up the value of clubs meaning that acquiring them has been made a lot harder.In conclusion, funding from TV has inflated the price of obtaining an NBA franchise in the USA. The case of Atlanta Hawkes which was valued close to the bottom rank in value managed rack close to $1 billion after nearly a year of speculation. The opportunity of buying a franchise in NBA is not common.