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he New York Knicks have been named the NBA’s most valuable franchise with a total value of USD$5.42 billion (AUD$7 billion), according to Sportico’s 2021 Franchise Valuations Report.

The report saw the Knicks, along with the Golden State Warriors and Los Angeles Lakers, lead the rest of the NBA’s 30 teams by a considerable margin, with all three teams valued over USD$5 billion, followed in fourth place by the Brooklyn Nets with a value of USD$3.4 billion (AUD$4.4 billion).

The Knicks, despite posting a losing record over 16 of their last 19 seasons in the league, over the course of the shortened 2019/20 season which was stopped early before continuing in the Orlando bubble which the Knicks did not attend, generated about USD$150 million (AUD$194 million) in operating income, and USD$428 million (AUD$553 million) in revenue, down 9% year-on-year.

Discussing the Knicks value, an anonymous sports banker told Sportico the Knicks rich corporate base helps maximise value, discussing a deal with JPMorgan Chase & Co. to sponsor specific portions of Madison Square Garden.

“They’ve sold naming rights without giving up the name,” the sports banker said.

The list was rounded out with the New Orleans Pelicans in last place with a value of USD$1.35 billion (AUD$1.75 billion), with the Memphis Grizzlies just above the Pelicans with a value of USD$1.36 billion (AUD$1.76 billion).

The report identified the average NBA franchise is valued at almost USD$2.4 billion (AUD$3.1 billion), indicating the league suffered a 2% drop in value as a whole due to the COVID-19 pandemic.

Discussing the drop in value, Arctos Sports Partners managing partner, Ian Charles, told Sportico: “Fundamentally, sports franchise intrinsic value is a long-term durable asset with significant, long-term revenue and cash flow growth.”

“The 12-to-24-month increase in operating losses or reduction in positive cash flow should not have a significant impact on the intrinsic value of these franchises.

“If someone is selling control of these assets in the next 12-to-24-months, there likely should be some purchase price adjustment, but it is [negligible.

“We are talking 0% to 3% in our estimate,” Charles said.

Despite the 2% drop in value, the report suggested that total revenue for the NBA’s 30 teams is down nearly 10% as a result of COVID-19.