Some may argue Mark Cuban essentially bought an NBA title considering the Dallas Mavericks own the league's second-highest payroll. Perhaps. There's also no question that winning a championship is another in a long line of investment successes for the self-made billionaire.
Obviously, more goes into raising a banner than just money -- just ask the New York Knicks. But if one takes a strictly financial view, Cuban and the Mavericks pocketed much more than the Larry O'Brien Trophy. The value of the franchise ought to skyrocket in years to come.
Sports business writer Patrick Rishe estimated the value of the Mavericks could rise between $30-45 million in the next year alone, according to his entry on the SportsMoney section of Forbes.com. That's a considerable jump for a franchise that's dropped in value the past few seasons.
"The residual effect of a sports championship can be significant," said Bill Glenn, senior vice president of Dallas-based The Marketing Arm. "You need to look no further than Ranger attendance this year to see what even appearing in a championship can do for your business."
The Texas Rangers went from averaging 30,928 fans per game last year to 37,061 so far this season at Rangers Ballpark in Arlington. The Mavericks aren't going to see an attendance jump, having sold out their past 399 regular-season games at American Airlines Center. But other revenue streams should begin to flow over the banks for the Mavs.
"They'll see ticket prices go up next year, and expect those to be higher over the next few years than they would have been without a championship," predicted Rishe, an associate professor of economics at Webster University. "They'll be able to negotiate better local media deals, but that may only last one negotiating cycle. They'll see merchandise increase, but that's a shorter-term effect, like a year, unless they win again."
The Mavericks' value grew at an exponential rate after Cuban bought the team for a then-record $280 million in 2000 (Donald Carter originally paid $12 million in expansion fees in 1979). When the Mavs first reached the NBA Finals in 2006, the franchise was valued at $463 million by Forbes. It remained in the $460M's through 2008 before beginning to nosedive.
The economic downtown, Cuban's high payroll (nearly $91 million this past season), almost yearly financial losses and uninspiring playoff results were the backdrop in the franchise's value slipping to $446 million in 2009 and a five-year low of $438 million in 2010, the last year of Forbes' valuations.
Despite the drop, the Mavericks remain the sixth-most valuable franchise in the league. The Knicks lead the way at $665 million, proving that success doesn't necessarily equate to worth. Market size and broadcast-rights fees stuff the piggy bank more than banners.
The Los Angeles Lakers not only take advantage of their rich Southern California real estate, they win. Kobe Bryant and Co. were working on another three-peat before being swept by the Mavericks. Still, the Lakers check in second at $643 million and are about to enter a 20-year television contract with Time Warner that some speculate is worth $3 billion.
If Rishe is right about next year's spike, the Mavs will hit the high-water mark in the franchise's 31 years. And if history is a guide, the value of Cuban's most-prized asset should continue to grow. (Rishe cautioned that a prolonged NBA lockout could negatively impact franchise values through fan backlash.)
Going back to 2001, the worth of championship franchises the year after winning a title grew by a combined $205 million, or an average of $22.8 million. Only the Boston Celtics fell, going from $447 million in 2008 to $433 million the next year.
Fans, sponsors and media companies want to partner with champions. The Mavs are primed to leverage the surge of goodwill that the Cuban-funded parade brought to town. And remember he's also got to pay for championship rings. Or is it bracelets? In either case, every extra nickel is welcome.
"Every brand wants to be associated with a winner," Glenn said. "The key question, though, is how long a championship-winning status can be leveraged. What's the stale factor? Ultimately, the fans and sponsors will determine that time period."
Glenn added that reinvesting that increased revenue into technology or services that provide fans a better experience could also open up new income possibilities. The Mavericks have long been at the forefront of "selling fun" at American Airlines Center.
"The only drawback for consumers is that prices will likely go up, but I'm sensing that fans won't hesitate paying the extra coin," Rishe said. "The euphoria of 2011 will create greater demand inelasticity toward Mavericks ticket prices for the next few seasons and won't diminish as long as the Mavs remain competitive."
Cuban won't be the only one cashing in on the title. The trio of Dirk Nowitzki, Jason Kidd and Jason Terry, in Rishe's opinion, are best positioned among the Mavericks' players to turn their increased visibility and marketability into additional endorsements and post-career options. Don't be surprised if Terry is touting Right Guard with his Larry O'Brien Trophy-tattooed bicep flexed and a smile.
Rick Carlisle, going into the last year of his contract, should also be in for a hefty raise as a title-winning coach if and when an extension comes across his desk. Cuban, though, figures to pad his pocketbook the most over time. He usually does.
"I still believe Dirk has a great deal of potential to capitalize on this championship and his own personal performance," Glenn said. "But Mark Cuban, in the end, will likely profit the most by virtue of the increased franchise value a championship delivers to the bottom line over time."
Cuban is of a unique breed of owner, cut from much of the same socks-to-jocks cloth as Dallas Cowboys proprietor Jerry Jones. That hasn't stopped Cuban from evolving during his decade-plus ownership of the Mavs.
"If I listened to anybody from the outside, I would drive myself nuts," he said. "[General manager Donnie Nelson] and I work together. He evaluates talent. I kind of manage the checkbook and balance the assets for the short term versus the long term.
"What I've learned in these 11 years is you just got to stay focused and just believe in yourself and trust your own ability and judgment. We've come close. We've accomplished a lot, but it's nice to finally get over the hump."
Cuban is in no hurry to sell the Mavs. In the past he's considered moving on, especially after the NBA Finals meltdown in 2006, more so out of frustration with the league office. Not anymore. After the title-clinching win in Miami, a giddy Cuban told his almost 2-year-old son, "This could be yours."
Rishe recently wrote on Forbes.com that Cuban should take another stab at Major League Baseball. He's already struck out on bids to buy the Rangers and Chicago Cubs, but that was before "Raise the Banner" shirts popped up around North Texas.
"Prior to winning a title, Cuban had already cemented himself as a legit sports owner," Rishe said. "A cash-liquid owner with a track record of turning around a moribund franchise into consistent winners. A guy with enthusiasm that allows his basketball people to make the key decisions. A guy fans want to party with and players want to play for. What else could you want in an owner?
"Hopefully, MLB will seize upon the opportunity of ousting Frank McCourt and encourage Mark Cuban to pursue interest in owning the L.A. Dodgers."
Cuban has long maintained that he'd be interested in buying another franchise if the price is right. The payoff comes later.
Art Garcia is a reporter for ESPNDallas.com.
Follow Art Garcia on Twitter: @ArtGarcia_NBA