While a debate is raging about the health of the NBA in terms of team parity, there are recent developments that further suggest the economic health of the NBA is robust.
Adrian Wojnarowski of ESPN has an interesting story about how the NBA has raised the debt limit of owners to $325 million.
This is a $75 million increase that was passed unanimously by the NBA Board of Governors last Friday. The NBA last raised the debt limit back in 2014, shortly after the league signed its $2.6 billion media deal.
This decision to raise the debt limit could soften the impact of the higher team payrolls and luxury taxes. Teams that take on debt often use that money to invest in infrastructure improvements at their playing facilities.
The reason the debt ceiling has been able to be increased so much is that the values of all the franchises are being assessed at higher totals.
Banks then feel more comfortable giving out loans that they feel can be repaid since these franchises are bringing in so much money.
According to a Forbes article from February 2018, each NBA franchise is now estimated to be worth at least $1 billion.
The Golden State Warriors were estimated to be worth $3.1 billion, which has them ranked as the 3rd most valuable team in the NBA.
The New York Knicks were the most valuable team at $3.6 billion, while the New Orleans Pelicans were the least valuable team at $1 billion. The NBA as a whole is in phenomenal financial shape, with the average team being worth about $1.7 billion.
It’s important to note that these estimates were made in February, months before the U.S. Supreme Court ruled that states could legalize sports gambling.
In the aftermath of that legal decision, Dallas Mavericks owner Mark Cuban said that he believed every NBA, NFL, MLB, and NHL team doubled in value thanks to that ruling.
Whether Cuban’s prediction holds true remains to be seen, but what’s clear is that the NBA as a business is absolutely thriving.