There’s no doubt the Cleveland Cavaliers instantly became a more valuable franchise yesterday. The only question would be how much more valuable LeBron James makes the team.
According to an article by Bloomberg News’ Scott Soshnick, we could be talking about a billion-dollar franchise. Soshnick spoke with a few experts in the field, including Peter Schwartz, a venture capitalist, and Chad Estis, a former chief marketing officer for the Cavs. They both were incredibly optimistic of how the team perhaps doubled in value.
“Certainly the brand itself, as well as the revenue that the team is able to generate, is much stronger with him — to the point of a billion-dollar franchise,” Schwartz said.
But Forbes — already an inconsistent estimator of team values, albeit one of the only public data sources — likely underestimates James’ massive impact in concert with the rapidly increasing values of NBA franchises. The Los Angeles Clippers sold for $2 billion recently to Steve Ballmer. The Sacramento Kings, a struggling organization that nearly moved from town, sold for $534 million last May to Vivek Ranadive.
NBA franchises are insanely valuable commodities because only 30 of them exist in the world, with so few ever coming close to the open market. Lest we forget, Dan Gilbert purchased the Cavaliers from Gordon Gund for an astounding $375 million in March 2005. After James’ departure, the team’s estimated value actually dipped under that mark. Now? Gilbert has to be one happy camper, banking in “The Return” with a glory period of skyrocketing values.
And if you didn’t see the news yesterday, the Cavs reportedly sold out of their entire allotted season ticket distribution for 2014-15 already. More than half of those 12,000 tickets were sold yesterday alone, according to reports from the Akron Beacon Journal’s Jason Lloyd and ESPN’s Darren Rovell. The rest of capacity for the Quicken Loans Arena, including partial season tickets, individual games and group sales, will be sold at a later time.
Jacob Rosen is a long-time contributor to WaitingForNextYear. He's also a writer online at SportsAnalyticsBlog and Nylon Calculus . An Akron native, Jacob is a current MBA student at the University of Oregon's Warsaw Sports Marketing Center. You can follow him on Twitter @WFNYJacob or e-mail him at udjrosen(at)gmail(dot)com.