The Buss family shocked the NBA world on Wednesday by selling their majority stake in the Lakers to Dodgers owner Mark Walter. ESPN reports the valuation of the team to be $10 billion, making it the most valuable franchise in sports history. Jeanie Buss will remain on as governor for “at least a number of years,” according to ESPN.
Karalis’ analysis: This is a big bomb that, at first glance, has the potential to change the NBA landscape. The Lakers are often referred to as a “mom and pop shop” because of their unique ownership situation. They are the rare team whose owners are rich because of the franchise, as opposed to having been owned by someone independently wealthy buying into it. As a result, the Buss family has run the team with a different tact than it will be run in the future.
Walter is a multi-billionaire on his own, so he doesn’t need to pull money from the team when he needs to do something. This isn’t an ATM for him, so the way the team is run will certainly fall more in line with the rest of the league.
However, I do challenge the notion that this will change the NBA landscape in any massive way. I think that kind of reaction would be appropriate under the old CBA, but not this new one designed to level the playing field at all costs.
I think Walter’s involvement will allow for some more free spending which will allow the Lakers to get deeper in to the tax and fear any repeater penalties less than before. However, that repeater penalty has become untenable, as we’ve seen in Boston, and the second-apron penalties are too punitive on the basketball side.
Walter can come in with six shooters and a big Yosemite Sam mustache declaring to be the rootinest, tootinest, shootinest owner this side of the Rio Grande and it won’t matter when Rob Pelinka walks in the door begging to get under the second apron so future picks aren’t frozen.
This system was specifically designed to prevent big money from coming into a team, willingly paying stupid tax bills, and keeping contending teams together past their normal expiration dates. The Lakers can be run differently but the league is essentially franchising its franchises. Anyone with money can buy into a McDonald’s, hire who they want and run it with their personal style, but there is an unavoidable system in place to make it work a certain way.
Wyc Grousbeck was right when he said teams will stay in the second apron for two years at most and then have to duck under. No one will be immune to that.
And for what it’s worth, Grousbeck and Buss are very close. They were part of the group that launched the Cincoro tequila brand. Maybe it shouldn’t be a surprise that after Grousbeck put up his share of the team for sale that his close friends on the opposite coast did the same.
This is a great time to cash out for the old guard of NBA teams. I wonder if this will trigger some other sales around the league. These are monster valuations, especially for the Lakers who, like Boston, do not own their own building. Why wouldn't some other long-time owners take advantage of these valuations? There are billions to be had for people who paid in the millions for their teams.
And at the same time, this is a great time to buy into the league. The CBA has put a cap on spending, so you don’t have to be Joe Lacob spending as much on taxes as you do the roster to win titles in Golden State. Soon, the 30-team NBA will be mostly in the middle of the spending curve, with a couple of outliers rebuilding or contending on the other end. Every couple of years, new teams will cycle into the outlier ends before being pushed back to the middle.
That's great for a brand like the Lakers. They get to live in the middle until they decide to go for it, they can afford to live in outlier land for a little bit longer than, say, the Oklahoma City Thunder, and then the rules will force them back to the middle again. Meanwhile, the demand for Lakers merchandise and the premium on partnering with the team will still keep the forum blue-and-golden goose laying eggs. Walter paid a premium for the team but he’ll make that money back in no time.
Let’s not forget the eventual income from two expansion franchises, which the league will eventually add. It might not be tomorrow, but momentum is building, so I wouldn’t be shocked if there's a rush to buy into the league now so the new expansion fees can help offset some of the cost.
I don’t know where all these billionaires are coming from, but they're out there, and they want in. For all the talk about rating and the health of the league, I’m pretty sure the rules of capitalism are telling us that the NBA is just fine. Billionaires known for making ungodly amounts of money aren’t rushing to buy into a sinking ship.
So good for the Buss family for hitting the lottery. They all get to run off as actual billionaires, not just “worth a billion because they own the Lakers.” They cashed in the asset and the team is being turned over to a guy Los Angeles loves for bringing them two World Series wins.
The on-court product, though, will be subjected to the same rules as everyone else. If anything, the standard of success might be higher, so some jobs might be on the line that wouldn’t have been under the Buss regime. But the CBA is the CBA, and it will do what it’s intended to do no matter who is signing the checks.