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Determinants of Franchise Value in the National Basketball Association

By Matthew Van Liedekerke

Franchise values in the National Basketball Association (NBA) have more than tripled over the last five years, with the average franchise worth $1.36 billion. Using panel data on NBA franchises between 2009 and 2016, this paper finds that market, performance, star players, and brand are significant determinants of franchise value at the team level and the NBA’s television contract is the primary driver of league-wide franchise value appreciation. The valuation methodologies used in this paper predict that a franchise in Seattle would be worth $1.4 billion in 2017, which could inform the NBA’s decision on expansion.

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Advisor: Connel Fullenkamp | JEL Codes: Z2, Z23, G32

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