Depending on whose estimate you want to believe, roughly half the 30 teams in the NBA are actually making money. One of those teams is the Golden State Warriors, which sold earlier this year for about a third more than anyone estimated, and by “anyone” I mean Forbes, which spends a lot of time analyzing NBA finances.
Also profitable: the Detroit Pistons. After longtime owner Bill Davidson’s death last year, ownership passed to his wife Karen, who has decided to sell. Forbes thinks the team will sell for about a third less than they think it’s worth:
As it relates to location, the Detroit MSA faced a 15.4 unemployment rate as of June 2010 compared to the national 9.5 rate. This would cause any potential investor to seriously question whether fans would continue to support the team at the level of avidity they have historically, especially given that the team is in major rebuilding mode and not likely to challenge the current Beasts of the East (Orlando, Boston, Miami) anytime soon.
Furthermore, in light of the climate of ‘guilt’ that surrounds corporate spending on sports sponsorships (especially in a city whose main industry has been the beneficiary of significant TARP money), a prospective buyer would be justifiably anxious over the likelihood of short term corporate support (e.g. buying luxury suites, paying for facility signage, etc…).
I don’t expect to see the Warriors in the playoffs next year either.
Still, Pistons attendance was off last year: the Palace of Auburn Hills averaged 18,751 paying customers, eighth in the league, which doesn’t sound so bad, but the Palace happens to be the largest of the 29 NBA arenas, with a capacity of 22,076. (The Warriors, in 11th place, sold 18,027 seats of 19,596 at Oracle Arena; for comparison, the 12th-place Oklahoma City Thunder averaged 18,003 out of 18,203 during the regular season.)
And there’s the timing issue:
[N]ot only is Ms. Davidson unlucky to be trying to sell the team during the current economic climate, but additionally she has to deal with the uncertainty of the NBA’s labor situation. With the current CBA set to expire after the upcoming 2010-11 season and with the prevailing sentiment being that without major player concessions — given that between 12-15 of 30 NBA teams reported operating losses last season — owners are poised to lock players out prior to the 2011-12 season.
This would of course also affect Golden State and any other team changing hands. (George Shinn’s deal to sell the New Orleans Hornets is seemingly in constant flux.)
On the upside, Ms Davidson also owns the Palace, so if the Palace and the Pistons go as a package deal, the new owner won’t have to worry about his arena lease.