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L.A. Clippers' $2 billion sale price won't affect Buffalo Bills' value

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A pro basketball team is being sold for $2 billion.

That must mean the Buffalo Bills of the almighty NFL are worth at least $4 kajillion, right?

Not at all.

In fact, the Los Angeles Clippers' eye-bulging sale price shouldn't impact the Bills one bit.

NFL and NBA economics aren't comparable. Differences are considerable in their collective bargaining agreements, how they handle broadcast contracts and arena revenues.

The Clippers' sale influences the NFL as much as Cleveland housing prices matter in Seattle.

"It's only because of the NFL's economic factors that you could even conceive of having a team in Buffalo or Green Bay in this day and age," said Andrew Zimbalist, a Smith College economic professor and noted expert on sports business.

"If the NFL had the economics of the NBA, there could never be a team in Buffalo."

A realistic guess for the Bills' sale price is $1 billion, about what the Cleveland Browns sold for two years ago and the Miami Dolphins in 2009.

The Bills' price will depend heavily on the specific instructions Ralph Wilson left for his trustees. For instance, if favor will be shown to keeping the team in Western New York, then the bids will be much lower than if the Bills are untethered beyond the current lease.

What the Clippers' sale does, however, is remind us that anybody with fat stacks of cash can overpay for a rare commodity.

Steve Ballmer agreed to spend $2 billion on the Clippers because he can. Forbes estimates the Microsoft CEO is worth $20.7 billion. Ballmer's bid to purchase the Sacramento Kings was unsuccessful last year. So he overpaid to make sure that wouldn't happen with the Clippers.

"It's important to underscore what Ballmer did with the Clippers didn't have any financial rationale at all," Zimbalist said. "The only way you can understand what he did -- unless he's making a very serious miscalculation financially -- is that he decided to take a fraction of his net worth and buy an expensive toy.

"The same way you or I would by a tennis racket or a bicycle or a computer, he decided to buy a basketball team."

But Ballmer isn't tossing his money down a disposal.

NBA clubs in major markets are highly profitable, and the Clippers have untapped revenue potential. They have made the playoffs three straight seasons and feature star power with Blake Griffin and Chris Paul.

In the NFL, teams have a national broadcast deal and split the money 32 ways. Revenue sharing and a salary cap make sure markets such as Buffalo and Green Bay and Cincinnati can have teams.

The NBA also has a national deal, but each team negotiates its own regional contract and pockets that money.

The Los Angeles Times recently reported the Clippers are believed to make $25 million a season on its regional TV deal. The Los Angeles Lakers, who play in the same arena and didn't make the playoffs this year, get $150 million a season from Time Warner Cable.

Expect the Clippers' local TV contract to soar. Some analysts are predicting it will double or triple. The deal with Fox Sports-owned Prime Ticket has two seasons left, but the L.A. Times reported this week Fox Sports executives already have reached out to Ballmer about renegotiating.

The NBA's labor agreement is more favorable to ownership than the NFL's. The NBA has cost certainty when it comes to payroll and doesn't have to worry about losing gobs of cash in concussion and pain-medication lawsuits.

Even so, $2 billion is an outlandish sum. Zimbalist figured the Clippers actually are worth half that.

"If everybody who purchased sports franchises was perfectly rational, it shouldn't have any impact at all," Zimbalist said. "But people who buy sports franchises do it, in significant degree, for emotional reasons.

"What it's reflecting is there are a lot of billionaires out there who like to buy sports teams because they're a lot of fun and have a variety of side benefits that have nothing to do with the profitability of the franchise."

  • Millhouse

    I'm surprised that Tim didn't mention that the Clippers came into the league as the Buffalo Braves in 1970 for a price of $3.5 million. Maybe he doesn't know.....

  • KilgoreWalleye

    Other than being a nifty anecdote, I don't think it has anything to do with the subject of the article, which is that the sale of the Clippers shouldn't affect the sale price of the Bills. And Tim has worked in Buffalo for years. I'm sure he is aware.

  • kevinmba

    Can you find someone new to interview? Zimbalist may have credentials but not much insight or intelligence. He has said the Bills aren't viable in WNY and now is shifting his story as it looks like they may stay.

    And saying Buffalo could not possibly support the NBA when there are teams in Oklahoma City and Memphis makes little sense. I'm not saying we are a coveted NBA destination by any stretch or that the NBA could compete with the Sabres/NHL, but a city of Buffalo's relative size is not out is the NBA's range.

    Please find a new "expert"!

    • Ron Warren

      The difference is that in each case Oklahoma City and Memphis have only ONE major league team(NBA). With the same amount of games and ticket prices as much or more than the NHL, Buffalo couldn't handle an NBA team along with the Sabres.

  • EdytaHusseinmuo

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    believe that a stay at home mom can make $7420 in four weeks on the internet .
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  • WminPhoenix

    No mention of the fact that the Clippers are in Los Angeles, the second most populated city in the US, while Buffalo is 73rd.
    NFL Czar Roger Goodell is practically foaming at the mouth trying to get a franchise in LA. What better than to move an existing one to LA LA land?
    When the Bills are sold, I believe their time as the Buffalo Bills is done. Someone spends a Billion or so will want to move the team to a bigger market to tap into a bigger fan base and a bigger source of money.

  • Andrew Zimbalist

    An NFL franchise can survive and be profitable in Buffalo, but it would be a lot less profitable than in other cities. The Wilson estate will be able to fetch a lot less money for the team if it tries to include ironclad provisions requiring the team to stay in Buffalo, and, moreover, the NFL, which has to approve any sale, may resist such provisions.

  • AGD

    The Clippers sale may not affect the Bills value -- but the value is whatever someone is willing to pay for a team. The only thing that's likely to scare off big out-of-town money is the lease, and I'm not sure that's sufficient to impel the other owners to block a sale and relocation.

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About the reporters

Vic Carucci returned to The Buffalo News as a Bills beat reporter in September. Carucci covered the Bills for 17 years before joining NFL.com as a columnist in 1999. Prior to rejoining The News, he spent three years as a senior editor for the Cleveland Browns.

Tim Graham returned to The Buffalo News in 2011 after covering the NFL for three years at ESPN and for one year at the Palm Beach Post. Before that, the Cleveland native spent seven seasons on the Buffalo Sabres beat for The News and was president of the Boxing Writers Association of America.

Jay Skurski joined The News in January 2009. The Lewiston native attended St. Francis High School before graduating from the University of South Florida.