| Abstract | This thesis shows that valuations published by Forbes.com differ from actual transactions in the NBA market. Since the year 2000, Forbes has published valuations for teams in major American sports leagues, one of which is the NBA. Often touted as the gospel truth in sports business, Forbes valuations are often quoted on fan message boards, local radio stations, and ESPN programming. However, since 2000, Forbes valuations have under predicted actual transaction prices by $153 million dollars, 50% below the actual selling price of 20 transactions in the 21st century. The stark difference between Forbes and market prices is then attributed to two financial factors: revenue and reported income. Forbes assigns a significantly lower multiple to revenue than actual market participants, possibly due to NBA market structure or an exogenous reason such as ego and prestige. While revenue is often regarded as the primary driver of valuations, this paper finds that income is actually a more accurate predictor of actual market prices. Because income is a primary driver of price and value, NBA teams can be regarded as a significant financial asset. |
