Pistons' title: Added value
The $500,000 check that the Detroit Pistons have to cut to the Los Angeles Lakers after winning the NBA Finals on Tuesday night is a small price to pay for the windfall that Pistons executives expect from their first championship since 1990.
The Pistons are expecting an increase of as much as $8 million in ticket revenue next season, thanks in part to the season ticket base rising from 11,000 to at least 13,000, and a likely 7 to 10 percent increase in ticket prices, according to Wilson. The Pistons -- at an average of about $34 per ticket -- have the third lowest average ticket in the league this year, according to Team Marketing Report.
Another revenue bump is on its way in the form of advertising buys on the Pistons' radio and television broadcasts. As is the case with about 70 percent of the teams in the league, the Pistons buy time on local stations, WB20-TV and WDFN, and sell the advertising to make money instead of earning a flat rights fee.
And due to the increased presence of Pistons merchandise in town and an expected blitz in congratulatory ads by Pistons sponsors, Wilson reasons that the team will get millions of dollars in free local advertising.
"There is also a psychic value to winning a championship," Wilson said. "We are now on the verge of being one of the glamour teams -- like the San Antonio Spurs or the Los Angeles Lakers. Being in that top tier of teams is worth in between $30 million and $40 million (on top of the actual asset value of the team)."
Of course, Wilson's boss, 81-year-old Bill Davidson, who built the 16-year-old Palace at Auburn Hills with $90 million of his own money, doesn't intend to find out the open market value of his team any time soon.
"He has no interest in selling," Wilson said. "It means he'll likely never take advantage of the high value, but won't be penalized when business is down."
Wilson, who has been the Pistons CEO since 1978, is quickly getting used to figuring out how much a championship in the 21st century is worth. With the Pistons title, teams owned by Davidson have won an unprecedented four championships in the last 12 months.
Davidson has a small ownership stake in the Tampa Bay Storm, who won the Arena Football League last June.
The Detroit Shock won the WNBA title in September.
The Tampa Bay Lightning won the Stanley Cup earlier this month.
After Davidson lost a reported $50 million on the Lightning since 1999, the team's run to the playoffs resulted in a roughly a $2 million gain. But winning an NHL championship could be minimized as the expiration of the league's collective bargaining agreement in September could lead to work stoppage and cut into next season's schedule.
Although the long-term reward for the Pistons will be greater than the financial results of the Lightning's run, this year's Pistons team will make a profit of only $1 million.
The Lightning's payroll was about $35 million; the Pistons' was about $20 million more. Lightning head coach John Tortorella made $500,000, while Pistons' head coach Larry Brown made approximately $5 million.
"We were about $6 million to $7 million higher than where we wanted to be for the Pistons this year," Wilson said. "We knew we were in a situation where we had to make the Finals to be in the black, but you can't make every decision based on the balance sheet alone."
Davidson was ranked No. 104 on Forbes' 400 Richest Americans list in 2003 with a net worth of $1.9 billion, so losing a couple million here and there wouldn't make that much of a difference. But thanks to what could be called the most successful year in sports ownership history, Davidson shouldn't expect to see too much red anytime soon.
"When you win an NBA championship, it takes about three years to lose that value if you don't sustain the quality," Wilson said.
The Pistons completely sold out for three years after winning the second of two championships in the 1989-90 season. But after being bounced out in the first round of the playoffs throughout the '90s, they have not sold out a season in the last 11 years. Meanwhile, the Detroit Red Wings -- who have won three Stanley Cups in the last eight years -- have sold out every game since December, 1996.
"The cost of being mediocre is astronomical for fans today," Wilson said. "We're not in a single-team market like Portland or Utah and that's why winning a championship is so important, because you have a shorter time to be mediocre because fans won't have the patience."
Darren Rovell, who covers sports business for ESPN.com, can be reached at email@example.com.
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