After months of speculation, it does seem like the Sacramento Kings will be sold and moved to Seattle. The ownership group, led by hedge-fund manager Chris Hansen, will have to put up a huge pile of money, as the Kings have reportedly been valued at $525 million.
This led LeBron James to tweet the following:
So the Kings getting sold for 525M!! And the owners ain’t making no money huh? What the hell we have a lookout for. Get the hell out of here
— LeBron James (@KingJames) January 21, 2013
James was right to question the owners’ claims that they were losing money during the lockout, and he’s still right to question that claim today.
According to Forbes, the Kings’ operating income from 2000 (first full season with the Maloofs paying the bills) to last season (the most recent year for which finances are available) was in the neighbourhood of $46 million. Just by owning a team, the Maloofs make about $3.5 million a year.
|Year||Operating Income ($ in millions)|
* data comes from Forbes’ 2008 financial profile of the Kings
The Maloofs bought the Kings from Jim Thomas in January 1999 for $156 million. Adjusted for inflation, this would be about $215 million. If the Kings are valued at $525 million, and the Maloof family owns a 53% share, then the Maloofs stand to earn about $278.3 million from this sale, a tidy profit of about $63.3 million. Add it all up, and the Maloofs have made around $109 million during the period of their 14-year majority ownership. On a yearly basis, this amounts to $7.8 million a year.
As a point of comparison, the average salary of an NBA player is somewhere around $5 million a year ($2006362672 in NBA salaries divided by 445 players gives us $4.5 million, actually, but we’ll be generous). This figure is highly skewed by a few highly-compensated players; the median salary for an NBA player is more like $2 million a year. So the Maloof family made about four times the salary of a typical NBA player over their 14-year ownership.
So while “average folks” like to complain about the earnings of professional athletes, it turns out that NBA owners make more money from the NBA than the players do. And the owners don’t really have to do anything except cut the check — they don’t put up much of the money used to build arenas anymore — whereas the players actually provide the product that makes the league profitable. And finally, NBA owners make hundreds of millions of dollars on their non-NBA assets.
So why don’t we have stereotypes about spoiled, entitled owners?