When Jerry Buss purchased the Lakers in 1978, he spent $20 million, but the team has grown to be a national brand that is now worth over a billion US dollars. The franchise value has steadily increased from 2003 to 2019, starting with $426 million to its current valuation of $3.7 billion. Also, despite having missed the postseason in four consecutive years by 2018 season, the team has continued to rake in some cash. In the 2017-18 season, they recorded revenue of $395 million and an operating income of $147 million. The drought had not yet finished since they posted another bad season resulting into 5 of the worst ten seasons in franchise history over the last five years.
Fortunately, the Lakers know how to keep the cash flowing, and they started with the signing up of LeBron James. Besides making changes on the court, there are other strategies the Lakers implement to ensure they have enough money to cover their expenses, and here are some of them.
The Los Angeles Lakers signed a television deal that helped propel them to the number two spot on NBA's most valuable teams, with a worth of $1.35 billion in 2014. They had entered the deal with Time Warner Cable in 2011 which would run for twenty years beginning 2012-13. The agreement is worth $4billion over the twenty years which translates to about $200 million per year for the team. The Lakers took home $122 million in 2013 season which was the highest amount in any United States league earned from a local Television deal.
Before the Time Warner Cable contract, the Lakers had a deal with Fox Sports West in which they were getting $30 million per year in rights fee. Fox Sports West was looking to renew the contract but its exclusive negotiating period ran out in 2010, and that is when Time Warner Cable came in with the most lucrative deal in the NBA. Time Warner Cable launched two regional sports channels, an English and Spanish one, leading to all non-nationally televised Los Angeles Lakers games being shown on Spectrum sports.
In 2016-17, the Lakers were the most profitable team in the NBA with a profit of $115 million after disbursing a revenue –sharing check worth $49 million. The media revenue was the primary driver behind the high profits since that season they received $149 million from local media television rights, with the Time Warner Cable deal contributing most of the income.
After the NBA Board of Governor's approval of sponsor patches on game jerseys at the top left corner, starting from the 2017-18 season, the Lakers decided to give it a try. In 2017, the Lakers broke their franchise's history by becoming the 16th team to have a jersey sponsor deal. The funny thing is that the Lakers had never heard of Wish until they approached the team with their sponsorship deal. After having had discussions with many brands, none of them seemed to be heading in the direction of the Lakers until Wish came along and they clicked.
The multiyear agreement with Wish will have the Lakers receiving $12-$14 million per year, despite Peter Szulczewski knowing that there would be questions behind inking a deal worth $36-$42 million over the three years. The Lakers deal is second to the Warrior's Rakuten jersey sponsor arrangement in which they receive $20 million annually.
The fact that Peter revealed his prospects for working with Lonzo Ball might have been what drove Wish to seek a sponsorship deal with the Lakers.
When LeBron James was with the Cleveland Cavaliers, his jerseys came in second in the top 15 most popular NBA jerseys. Consequently, the Cavaliers were the second to the Warriors in merchandise sales. The Lakers had no individual jerseys in the top 15 list, but still, they came in third, but that is something that will change since they signed up LeBron James for a four-year contract worth $154 million, in July 2018. The "LeBron effect" has already been felt in ticket and merchandise sales. Since signing up, on eBay, 12,000 of LeBron jerseys which go for a price of $23.25 including shipping, have been sold, translating to around 200 jerseys per day. Considering that that is one site, we can only imagine the figures on other online retailing websites.
Written by Garrett Parker
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