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The sports world got sticker shock Wednesday when ESPN reported that the Buss family sold its majority stake in the Lakers to Dodgers owner Mark Walter at a valuation of $10 billion. The Athletic later reported that the valuation could reach $12 billion.
Several factors contributed to the astronomical figure, as the Celtics just recently sold for $6.1 billion, and Walter and his partners had purchased 27% of the Lakers from AEG in a deal that valued the team at $5 billion in 2021.
How did the value of the Lakers double in just under four years? There’s a pie chart of reasons, led by the NBA’s lavish new TV deal.
$77 Billion Windfall
The NBA is starting an 11-year, $77 billion TV deal later in 2025. In a game of musical chairs where there were more bidders than spots, longtime partner TNT is out, and Amazon and NBC are in. Disney’s ESPN/ABC remains a partner, as the league is poised to triple its annual national TV revenue.
“The new media deal super-charged the new $$,” Ringer founder Bill Simmons tweeted in the immediate aftermath of the Lakers deal.
Prime Luka
The Lakers are in the advantageous position of having a superstar in his prime. Luka Dončić, acquired from the Mavericks in a stunning trade this season, is just 26 years old. Photos of him appearing to have gotten in substantially better shape have already started to circulate on social media this season. Dončić is eligible for a four-year, $229 million extension later this offseason, according to ESPN’s Bobby Marks.
Magic Number
According to the Los Angeles Times, each of Dr. Jerry Buss’s six sons and daughters owned an 11% stake in the Lakers. The significance of the $10 billion sale price is that each of their stakes is worth more than $1 billion.
Business Synergies
There are strategic benefits to owning multiple sports franchises in the same region. With Walter and his partners owning the Lakers and the Dodgers, they can find efficiencies in departments like sales and marketing. For example, they can carve out bundles for sponsorships that reach both teams and are relevant for a vast majority of the calendar year. Local TV rights can also be bundled down the road.
Inflation
As the federal government printed trillions of dollars in an attempt to stave off the economic effects of COVID-19, $1 in 2025 is not quite worth the same as it was in 2021. The U.S. government’s CPI calculator claims that $5 billion in 2021 would be $5.92 billion today. That would be an 18% increase, but many Americans look at their expenses and think that number is low.
