NBA expansion appears more realistic than ever because of the revenue lost to the Covid-19 pandemic. Adam Silver has acknowledged the possibility, and it is a sensible one given the NBA’s current financial situation.
Brian Windhorst of ESPN reported that the league could charge a $2.5 billion expansion fee, making $5 billion in total if the league jumped from 30 teams to 32. Divide that among 30 teams, and each would receive an immediate payment of $166.7 million but Silver seems to think that the league can do better.
In Sportico’s valuation event on Tuesday Silver suggested that the league would want even more than has been reported. He said it “doesn’t feel like the right time” to focus resources or attention on future growth with the league still trying to navigate the pandemic. But Silver did say that “clearly [the] valuations [show] some of the reported numbers [for expansion fees] are very low in terms of the value at which we would expand.”
Silver’s comments are exactly what the seller should say, hoping to increase the buy-in price for a new team. The market may have different ideas.
Most importantly, that means less TV money for all existing teams. In the short term, $166.7 million would be extremely helpful. In the long term, The existing ownership groups would wind up losing far more than that in terms of their share of national television revenue. The league’s current deal with ESPN pays out $2.6 billion per year. This is around $86.7 million per team but would decrease to $81.3 million if divided among 32 teams.
