There was a time when owning the Lakers meant inheriting a basketball squad. Now, it increasingly looks like claiming one of the most valuable cultural institutions in American sports. The sale of Tinseltown’s Team to Josh Kushner and Bob Iger for a whopping $12.5 billion is remarkable not simply because it sets another record for a National Basketball Association (NBA) franchise, but because it comes barely a year after Mark Walter acquired controlling interest from the Buss family for roughly $10 billion.
The speed of the transaction is perhaps more revealing than the price. Walter’s ownership had begun only in October, when the league unanimously approved his purchase. Evidently, Kushner and Iger had been involved in the NBA’s expansion process in Las Vegas before pivoting toward an aggressive bid for the Lakers. The change in direction speaks volumes about where the most desirable franchises now sit in the sports economy. A new team in Las Vegas might offer enormous potential, but the pride of Los Angeles does not need to be built. Its history, market, global following and commercial infrastructure already exist.
The final figure is therefore less about the value of a basketball roster than of everything surrounding it. The Lakers have won championships with such notables as Magic Johnson, Kareem Abdul-Jabbar, Kobe Bryant, and LeBron James, but their importance has never been confined to what happens between the opening tip and the final buzzer. They are one of the few American sports franchises whose identity has become inseparable from the city they represent and from the entertainment industry surrounding them. Iger, who spent decades at the center of the Disney empire, understands the commercial power of intellectual property and global storytelling. Kushner, meanwhile, built Thrive Capital into a major venture-capital firm and already has experience as a sports investor. Their pairing positions the acquisition as both a conventional change of ownership and an investment in a permanent global brand.
The vantage point helps explain why the Lakers have appreciated by a couple billion dollars in such a short period. The new transaction provides yet another indication of how quickly valuations have moved upward across professional sports. The economics are no longer based solely on ticket sales, television contracts, or even championships. They include media rights, sponsorships, premium seating, merchandise, international audiences, and the scarcity of owning an established franchise in a major American market. There are only so many Lakers. There is only one Los Angeles. And there will never be another opportunity to create the singular synergy from scratch.
For the organization itself, however, the more important question is what happens after the sale. Kushner and Iger have said they intend to build on the foundation established by Jerry and Jeanie Buss, compete at the highest level and serve the team, the city, and fans. These are familiar statements, but the Lakers present an unusual challenge for any new owner because success cannot be measured simply by financial returns. The franchise carries expectations that are considerably larger than most professional sports organizations. Every ownership group eventually discovers that buying the Lakers is one thing; convincing Los Angeles that you understand what the Lakers mean is something else.
Which is ultimately what makes the transaction more significant than another record sale. Walter’s brief ownership has shown how quickly the financial value of elite sports franchises can rise, while the arrival of Kushner and Iger demonstrates how attractive the Lakers remain to investors with ambitions extending beyond basketball. The irony is that the franchise has become more valuable even as ownership has become less stable. For decades, the Buss family provided continuity that connected the Lakers’ business decisions to their sporting identity. Now the franchise enters another transition, this time under owners whose backgrounds lie in venture capital, entertainment, and global media. The real test will not be whether they can justify the acquisition cost, what with the market having already provided the reason. It will be whether they can preserve the intangible value that made it a seeming bargain in the first place.
Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and human resources management, corporate communications, and business development.