Profiting $250 Million From $7.7 Billion Worth Warriors, Ex-Owner Unravels Shocking Truth About NBA

The Golden State Warriors is one of the most successful and well-known franchises in the NBA. According to Forbes, they are the highest-valued team in the league with a whopping $7.7 billion net worth. This franchise was owned by venture capitalist Chamath Palihapitiya for more than a decade until last year. The former owner, who has been a major part of the NBA market, reveals some hurdles that affected the realm of pro sports, which inadvertently include the NBA.

In an interview on The Joe Pomp Show, Chamath breaks down the importance and effects of media rights in the NBA, which in turn, affects the team valuation in the league.

Chamath Palihapitiya shares that NBA’s growth could decline

Chamath gives us an idea of the rise in team valuations in the NBA that we have seen over the years. In the past, for instance, the teams used to trade at a 3-4x revenue multiple, as opposed to now, when it has gone up to a 10x revenue multiple. The expansion has mostly gone unnoticed because of the many components that come into play, such as the international popularity growth of the league, sports betting, real estate development, and most importantly, the money generated through television rights.

Chamath shares, “There was an article in The Wall Street Journal, I think, recently about a meaningful uptaking churn amongst all the streamers, Netflix, Hulu all of these companies, Amazon, who are the only folks in a position to actually have the balance sheet, to keep paying a premium for professional sports rights.”

Media rights are essential to the NBA’s expansion and the success of its teams, as was evident when NBA franchise valuations doubled from $634 million to $1.1 billion overnight when the last media rights deal was signed in 2014. However, we have noticed a decline and bankruptcy across regional sports networks, which has caused entities like the NBA, MLB, and NHL to lose hundreds of millions. The media landscape is constantly shifting, and nobody should anticipate that NBA valuations will increase at the same rate as they have over the past ten years.

Chamath’s nine-figure profit from the Warriors

The Warriors are currently valued at $7.7 billion, and Chamath got a huge chunk of this share when he sold his stake in the franchise last year. He bought a 10% share in 2011 for $25 million and by the time he sold his stake, made more than $250 million. This is exactly the kind of 10X expansion of team valuation that has been mentioned earlier.

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When we put this in perspective, we see that the NBA landscape is shaped by numerous deals that take place behind the scenes in addition to the sport itself, and team valuation plays a huge part in these deals. After being a significant part of the league for over ten years, no one would understand this better than Chamath, who has seen the rise and dip of pro sports valuation.

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