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Forbes does great sports business analysis, but they've been too conservative. The Milwaukee Bucks, valued by the business site at $410 million, sold for $550 million in April. The Los Angeles Clippers, valued at $575 million, sold for $2 billion in May. Franchise values are rising for many reasons, with new TV deals in particular set to drive them to record highs. Even if billionaire Steve Ballmer overpaid for the Clippers (Stern School of Business valuation expert Aswath Damodaran puts their value at $1.6 billion), it is clear we have entered the new value paradigm faster than expected.
With every team worth more than expected, every owner is, too, and the bump should be more than enough to make Charlotte Hornets majority owner Michael Jordan a billionaire.
Jordan's net worth was estimated at $750 million in February in a thorough analysis by Forbes's Kurt Badenhausen. The NBA legend earned an estimated $90 million in 2013, more than any current athlete including current NBA leader LeBron James, who earned an estimated $60 million. His wealth came primarily from an unprecedented deal with Nike, with his line of shoes alone selling $2.25 billion in the U.S. last year, along with other endorsement deals, business holdings, and very high pay during his playing career.
But he also owns 80% of the Hornets, and that asset is suddenly looking a lot more valuable.
Although the Hornets (then Bobcats) franchise was valued at $175 million when Jordan bought a 80% share in 2010, its projected value increased quickly. By 2013, the team was already worth $410 million and expected to rise significantly in the near future, according to Forbes. Badenhausen concluded in a February article that Jordan's "earnings prowess shows no sign of letting up and should land him a spot on Forbes billionaire list in the coming years." Within months, however, apparent NBA team values would skyrocket.
The Bucks sold for 34% more than Forbes's projection. The Clippers sold for 248% more. Let's split the difference and say Jordan's Hornets are worth 159% more than projected, putting their current value at $1,062 million. That would put Jordan's share at $850 million, rather than the $328 million figure Badenhausen used, raising his new estimated net worth to $1,272 million.