On Monday, Houston Rockets CEO Tad Brown announced that the franchise is for sale. The news was a surprise, even to those inside the organization. First off, we offer our congratulations to the future back-to-back NBA champions —
— but we still have questions.
Why Would Someone Sell the Rockets, a Successful Franchise, Right Now?
The short answer is this: Leslie Alexander bought the Rockets for $85 million in 1993. That’s the same amount that the Magic gave Evan Fournier just last year. Evan Freaking Fournier! Per Forbes, the value of the Rockets today is estimated to be at least $1.65 billion. That means that the value of Alexander’s investment increased more than 19 times in 24 years. If there’s a Wall Street Mount Rushmore, put Leslie Alexander on it.
The long answer may be that something is happening that we don’t know about — yet. Alexander has also put three houses on the market since April for $16.4 million, $21.5 million, and $46.5 million. That’s a whole lot of cash. Tack that on to the $1.5 billion (or more) he could get for the Rockets, and you’ve got yourself a fortune. This is all speculative, but it’s worth asking why Alexander is liquidating so many of his assets. [Insert suspicious emoji here.]
What Have Teams Sold for in Recent Years?
Haley O’Shaughnessy: In 2013, the Kings sold for a then-record $535 million. At the time, such a monstrous sale was shocking.
In 2014, the Bucks pushed the bill further, selling for a new record of $550 million. Sacramento is a top-20 TV market, per Nielsen; Milwaukee is 35th. If that kind of money is doled out for a small-market team, what’s the price tag for one in a big city?
Thanks to Donald Sterli — this feels wrong. Let’s start again. Because of Donald Sterling, we found out in the same calendar year. Steve Ballmer bought the Clippers in August 2014 for $2 billion.
Yes, that was also a new record. The only sale since was in 2015, when the Hawks sold for $850 million.
What’s the Size of Houston’s TV Market?
O’Shaughnessy: Houston is the eighth-largest television market in the country. (Texas and California are the only states to each have two cities among the top 10 markets.) But the Rockets might have an even bigger market to consider beyond Houston:
What Is the James Harden–Daryl Morey Effect?
Uggetti: The Rockets recently signed Harden AND Morey to lucrative, long-term extensions. Having a superstar, and a proven GM, increases the value of the franchise. Oh, and they just traded for Chris Paul, too.
This won’t be a case of Ballmer rescuing the Clippers from Donald Sterling, or Vivek Ranadive "saving" the Kings from the Maloofs. Prospective buyers will be bidding on an immediate championship contender with a stable front office in a top-tier market.
So, What Will the Market for the Rockets Be?
Uggetti: The NBA’s popularity, and franchise values, will likely continue to skyrocket as teams begin to put ads on jerseys and TV deals come in and grow. Just like when Alexander bought in way back in 1993, buying in now may be an investment that eventually provides a very (very!) healthy return.
Ballmer slightly overpaid for the Clippers at $2 billion, but that number may have set the market, and may also be surpassed quickly if there are suitable buyers thirsty to get into the NBA owners circle — one that very rarely opens up to prospective buyers. Right now, an NBA franchise can work both as a smart investment and, as it does for Ballmer, as a toy or hobby that can enhance its owner’s public image.
How Long Does It Take to Sell a Team?
O’Shaughnessy: Brown says the timeline for the sale to happen is "sooner than later," (which, see liquidation theory above), so let’s see how quickly recent teams have sold. The Clippers were a unique, scandalous situation, and sold in a short six weeks. The Bucks’ sale was finalized in about five months, and the Hawks sold in seven.
Related: The season begins in less than three months.
What Does This Mean for Chris Paul and the Rockets’ Free-Agent Targets?
Uggetti: If the Rockets don’t add Carmelo Anthony and/or beat the Warriors this season, then I’m sure Morey will want to reconfigure the team once again after this upcoming season. So, the competitive balance of the league may depend on the spending preferences of the new owner. Say what you want about Alexander, but he was not stingy. He paid Harden, and dealt for Paul, who will make $24 million this season, but will become an unrestricted free agent again in summer 2018.
Will Owner X want to hand a long-term contract to an aging point guard? If Paul can bring LeBron James to Houston that answer will be a resounding "yes." But if LeBron goes to L.A., why wouldn’t Paul join him there, too? Depending on who decides to fork over the money for the team, the Rockets may go from offseason winners and potential Warriors beaters to a mediocre team.
Who Are Possible Buyers?
O’Shaughnessy: Let’s spitball here.
The King James Theory
(James would have to retire for this to happen, though, so maybe this isn’t in the cards.)
The Guy From Tech Theory
Silicon Valley is already silently relocating to Texas. The extracurriculars there, they’ll soon find, are different than out west. What’s a better hobby than controlling a team for the piddly price of around $1.65 billion?
The Queen Bey Theory
These facts are unignorable (shout-out my colleague Sean Yoo):
A) Beyoncé is from Houston.
B) Beyoncé has money; like, a lot of money; and …
C) … Jay-Z is no longer a minority owner of the Nets.
D) Beyoncé loves watching basketball.
E) Beyoncé loves watching basketball so much that she went to Nets games.
F) Beyoncé loves watching basketball and LeBr — nevermind.
PLEASE BEYONCÉ PLEASE DO THIS AND PUT IT IN BLUE’S NAME.
The Richest Man in Houston Theory
According to this very helpful list of 12 Houston billionaires, Richard Kinder, a "pipeline magnate," is the wealthiest person in the city. If you Google "Richard Kinder basketball," the third result is a picture from 2006 that the San Diego Union-Tribune dug up to use for an article in 2016. The good news: The picture is of Kinder at a Rockets game. The bad news: He doesn’t look like he’s enjoying himself.