FOR SALE: Atlanta Hawks
Another house is going up for sale on NBA island after Atlanta Hawks co-owner Bruce Levenson self-reported an “inappropriate and offensive” email he wrote in April 2012. If you want to read the email to Danny Ferry you can find it here. There is plenty of speculation out there as to his motivation for self-reporting, and the timing is certainly suspect, but here we will focus purely on what the Atlanta Hawks may be worth. The current marketplace for NBA teams is interesting for several reasons – the revenue-boosting impact of the 2016 TV deal, the recent sales of the Clippers and Bucks, and of course the trophy nature of owning an NBA franchise.
First, let’s paint the picture of the Atlanta Hawks versus the rest of the league. Atlanta is at best a mid-market team, and posts dismal attendance and revenue figures. Last season, the Hawks were 27th in average attendance per game at 14,339, and 28th in average revenue per game at $505,593. The Milwaukee Bucks, often referred to as the least valuable franchise in the NBA, averaged $643,330 per game. According to Forbes, the Atlanta Hawks brought in $119 million in revenue in 2014, putting them in the bottom 20% of the league. They ran an operating deficit of 3.6 million and were one of the most levered teams in the league. On the basketball side of things the story is a bit brighter. The Hawks have made the playoffs each and every one of the past seven seasons – the longest streak in the Eastern conference and *just* shy of the Spurs’ 17 consecutive post-season appearances. They have a promising core, Al Horford is back, a quality coach in Mike Budenholzer, and almost $30 million in cap space next summer. The upcoming season could be a very good one for the Hawks.
Piggybacking off the value of A House on NBA Island piece by Anthony Dedousis, here are the revenue multiples for NBA franchises:
I previously discussed the impact the 2016 TV deal will have on the salary cap, and what’s worth remembering is the 50% of the proceeds from the TV deal that don’t go towards the cap are funneled to the owner’s. With a windfall north of $30 million per year in mind potential bidders are likely to up what they are willing to spend on the Hawks. Given that Atlanta is a mid-market team, expect to see a revenue multiple anywhere between 4x and 7x, and don’t be surprised if the multiple is a bit higher because of the spillover from the Clippers’ $2 billion bonanza. Below are the potential values of the Atlanta Hawks based on revenue growth and multiples:
Given Hawks’ revenues of $119 million in 2014, the team should fetch anywhere between $476 to $990 million. I expect the winning bid and the Atlanta Hawks sale price to be somewhere around $700-800 million So… if somebody wants to join me in making a bid I can contribute $50.
