Shopping for a basketball team

This week was funny. CNBC released this 2025 NBA team valuations this week. We’ve provided some color on the top ten teams below.

We were researching the collapse of the Regional Sports Network (RSN) model involving the NBA and MLB, and the list just kind of fell into our lap. A thought noodle happened, then a mental exercise ensued, and we got into the question:

Which NBA Franchise would you buy that had the highest upside?

So this week, peer into our brains as we discuss our thinking on which franchise we would buy.

We’ve always been ‘value’ people. We’re not trying to buy the best. We’re trying to find the highest upside. Call us elitists and smarter than everyone else, but….(there’s no but).

Anyway, yikes. Here are the main points of this thought experiment

1. Select a fantastic market with a (potentially) undervalued team.

2. Choose a team with high potential for local/regional revenue growth.*

3. Consider if there are other sports in the city/region

4. Ignore the roster (because OKC is the choice and we don’t have to think anymore).

#1 - Pick a great market

The list kinda did this for us. We went straight to the bottom 10 NBA franchises on CNBC’s list.

Long story short: We’ve boiled it down between the Spurs or the Hornets.

Both San Antonio and Charlotte are expanding markets with limited national appeal but minimal competition from other sports, offering a strong environment for local engagement.*

Both markets (Charlotte and San Antonio) also have the same Regional Sports Network (Diamond Sports Group), which crawled out of bankruptcy with an influx of cash from FanDuel and Amazon (low key Amazon is killing it by signing a national media rights deal with the NBA and involving itself in local broadcasts. A move to be studied later).

*If you looked at this list you probably asked, “why not Portland?”. Simple answer: Limited upside for international growth.

But first, a note on Regional Sports Networks (RSNs):

Unlike the NFL, which broadcasts all its games on national networks, other sports have too many games for that to happen. Most teams in the  NBA, NHL, and MLB have deals with RSNs to broadcast their games locally. These media rights are negotiated for a sum of money paid from the network to the team over a number of years.

This model has been getting…. tested in recent years to say the least. Most prominent examples are the Phoenix Suns and the Utah Jazz, who have dropped their RSN as a broadcast partner. You can buy a season package typically or pay 5-6 bucks to watch 1 game. While sacrificing current revenue, both teams see potential for greater reach and engagement of their respective fan bases. It seems like more teams are going to be doing this in the future. More on this in another Sunday issue.

#2 - Choosing the team with higher potential

It’s a tough choice, but we’re going to pick the San Antonio Spurs.

Charlotte’s market is growing exponentially with no MLB or NHL team. It’s the 22^nd largest media market in the U.S. The people moving there have a lot of disposable income. The franchise is a prime candidate to become a really valuable asset and doesn’t have to be in the shadow of the Carolina Panthers.

But let’s take out a map:

The Spurs are in a worse media market (early 30’s), but the promise of further expanding their fan base into Austin (tremendous growth) AND Mexico (bigger international growth) is more alluring than Charlotte metro/Greater Charlotte. They already have their G league team there.

#3 - Are there other sports in the area/region?

The Spurs are operating in a vacuum. There are no other major league teams in the region, which means there is no competition for dollars from any other team.  like the Hornets are with the Panthers.* There’s also talks for a new arena in the city, which is a great revenue sweetener when a team is playing 40 games a season (more ticket sales, more premium seating, concessions, parking, etc.).

*We’d like to note that both these areas are under serious consideration for a MLB expansion team. We don’t know what serious means but they pop up on all the listicles.

#4 - Ignore the roster (we tried. we can’t)

This is just extra, but the Spurs have Victor Wembanyama. He’s a generational talent on the court from France. His talent alone knocks two birds with one stone: pricing power to increase ticket revenues, and local/international growth.

Once we buy the team: Focusing on growth

For context, take a look a the table below:

Right now, it's a prime opportunity for NBA team owners to experiment with new methods to boost fan engagement. With the new media rights deal generating nearly three times the revenue of the previous one, we would probably explore ways to balance revenue with audience reach.

Consider the Phoenix Suns' bold moves: reducing concession prices, airing local games without a regional sports network, and more. There's no reason not to test the waters with proprietary streaming platforms or lowering prices to remove barriers for fans attending games*

*This would involve a lot of friction. Mainly re-negotiating local broadcast deal with the current RSN or waiting for the terms of the contract to fully roll out a streaming service. 

In the end though, we don’t have the money, and Peter Holt is probably not looking to sell.

Alright…our anxiety fueled fever dream is over.

Have a great week!

Ahmed and Peter