Even small pieces of NBA teams are going for big dollars.
Latest example: Back in December 2020, the Miller family sold 80% of the Utah Jazz to Ryan Smith in a deal that valued the NBA team at $1.66 billion. Keeping a minority stake has proven to be a clever move, according to sports bankers. Private equity firm Arctos Sports Partners and another investor have now combined to buy a roughly 10% stake from the Miller family, the bankers say, in a transaction that values the Jazz, equity plus debt, at about $2.25 billion, or 29% more than Forbes valued the team last October.
Sources say the actual valuation could have been higher, but the price was tied to Smith’s original agreement to buy his majority stake of the Salt Lake City team.
The deal values the Jazz at about nine times estimated revenue for the 2021-22 season and is in line with the revenue multiple when Arctos increased its stake in the Golden State Warriors in December to 13% from 5%, at a $5.4 billion valuation.
The NBA and, just recently, the NFL are the only two sports leagues in which teams are being valued at revenue-to-enterprise values above seven. For the NFL, it’s the enormous revenue and profitability. For the NBA, it’s the appeal of a global sport and the expectation that its next media rights deal will at least double in value from its current average of $2.66 billion a year.
Here’s a breakdown of the explosive growth in the NBA’s media rights agreements:
Source: https://www.forbes.com/sites/mikeozanian/2022/08/23/utah-jazz-minority-sale-values-nba-team-near-225-billion-29-more-than-a-year-ago/