Honors Theses and Capstones

Date of Award

Spring 2023

Project Type

Senior Honors Thesis

College or School

PAUL

Department

Finance

Program or Major

Accounting and Finance

Degree Name

Bachelor of Science

First Advisor

Michael Hanlon

Abstract

The National Basketball Association (NBA) has slowly become one of the most popular professional sports leagues in the United States as well as growing its reach in European and Chinese ties. With this growth, we have seen the value of NBA teams climb significantly. Mark Cuban, a well-known entrepreneur and Shark on ABC’s Shark Tank, purchased the Dallas Mavericks for $285 million in 2000. They are now worth a staggering $2.5 billion (as of 2021). In 20 years since Cuban bought the Dallas Mavericks, they have seen close to ten times increase in their value. This begs the question, what factors influence value growth for NBA teams. There are a number of things that you can speculate about. It would make sense that operating income would be a leading driver. The more money that an NBA team brings in and the less money that they spend, the more valuable the business… right? Well, I wanted to know if that was true. As an avid NBA fan, I assumed that the better that a team was, the more valuable they were. The NBA gives out an award for the most valuable player each year and that award is often given to a player that helps their team win. So it would make sense for the value of teams to trend with successful seasons… right? I wanted to figure out exactly what was the best predictor of value for NBA teams, and that’s what this research examines.

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