The Clippers come in 25th in Forbes’ annual NBA team valuation rankings at $297 million. Donald T. Sterling paid about $13 million for the franchise in 1981. Forbes’ takeaway:
The Los Angeles Clippers lease at the Staples Center sums up owner Donald Sterling’s philosophy of running the franchise: maximize profits by keeping fixed costs low. The Clippers pull in less revenue from premium seating and arena advertising than the typical NBA team. But they pay only $1.5 million a season in rent at the arena, which is owned and operated by AEG, owner of the Los Angeles Kings and a minority stake in the Los Angeles Lakers. The Clippers have posted more than $9 million in operating profits the past five seasons despite fielding one of the worst teams in the league. In 2004 the Clippers extended their lease at Staples for 10 years.
Sterling’s monetary handprint can be seen in the data. Only three teams in the league are operating without debt: the Knicks, Pistons, and the Clippers. Whereas other perennial losers like New Jersey, Charlotte, and Memphis are leveraged to the hilt, Sterling milks his cash cow with a sweetheart lease deal and low overhead costs. He paid for the new facility in Playa out of his own pocket, and secured the Clippers a quality radio deal.
Sterling’s temperament, self-awareness, menschkeit, and ethics are all fair game to critics, but his grasp of the NBA’s macroeconomic issues is unassailable.
