usbl.com
USBL PLAYERS IN THE NBA
PLAYER
NBA TEAM
FORMER USBL TEAM
Darrell Armstrong
Orlando Magic
Atlanta Trojans 1994
Muggsy Bogues
Golden State
Rhode Island Gulls 1987
Chris Childs
New York Knicks
Miami Tropics 1994
Michael Curry
Milwaukee Bucks
Long Island Surf 1992
Lloyd Daniels
Toronto Raptors
Long Island Surf 1992
Emanual Davis
Houston Rockets
Philadelphia Aces 1991
Mario Elie
Houston Rockets
Miami Tropics 1987
Darvin Ham
Washington Wizards
Jacksonville/Florida 1996
Avery Johnson
San Antonio Spurs
Palm Beach Stingrays 1988
Rusty LaRue
Chicago Bulls
Carolina Cardinals 1996
Tim Legler
Washington Wizards
Philadelphia Spirit 1992
Sam Mack
Vancouver Grizzlies
New Haven Skyhawks 1992
Anthony Mason
Charlotte Hornets
Long Island Surf 1991
Sam Mitchell
Minnesota Timberwolves
Tampa Bay Flash 1986
Ivano Newbill
Vancouver Grizzlies
Atlanta Trojans 1995
Kevin Salvadori
Sacramento Kings
Florida Sharks 1995
Shawnelle Scott
Cleveland Cavaliers
Long Island Surf 1996
Mark Strickland
Miami Heat
Atlantic City Seagulls 1996
Derek Strong
Orlando Magic
Miami Tropics 1991
Carl Thomas
Golden State Warriors
Atlantic City Seagulls 1997
Charlie Ward
New York Knicks
Jacksonville Hooters 1994
John Williams
Phoenix Suns
Staten Island Stallions 1986
Lorenzo Williams
Washington Wizards
Palm Beach Stingrays 1992
Travis Williams
Charlotte Hornets
Florida Sharks 1995
One of the most appealing characteristics of team ownership to potential investors,
is the extremely low cost of owning a franchise. Additionally, the annual operating
costs are low. A potential owner could purchase a USBL team for $300,000, or
about 2% of an NBA franchise. In most cases, the owner is giving something back
to the community and generating profits at the same time. After purchasing a
team, there is the tremendous likelihood that franchise appreciation could occur as
the league attracts interest . On a separate comparison level, minor league baseball
teams are worth in excess of $6,000,000.
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WHERE CAN FRANCHISE VALUATIONS GO?
Investment in minor league baseball franchises show that franchise valuations have
the capability of changing dramatically in a relatively short time span.
We are using minor league basketball franchise valuations as a proxy for USBL
franchises because, we feel, that within the next three years the USBL will launch a
winter league that will eventually evolve into the minor leagues for the NBA. In our
view, this league has excellent prospects because of two key parameters:
the need for NBA clubs to develop a larger pool of player talent, reflecting
the dramatic escalation in player salaries; and
the need for consumers for affordable tickets to professional basketball
games.
Mr. Miles Wolff, president and commissioner of the independent Northern League,
noted that "...minor league franchises had no real value until the early 1980s. Back
then you could buy them for debts."
He purchased the class A Durham Bulls in 1980 for $2,400. This year, the
franchise is slated to become a class AAA (as Table I-indicates class AAA, teams
presently have a market value of $7 million to $10 million)
The objective of this section is to illustrate the potential jump in valuation of a
USBL franchise over the next decade. Presently USBL franchises have a relatively
modest valuation that should substantially move up as attendance at the arenas
increases and as TV and media exposure expand. In our opinion, the valuation for
USBL franchises have the capability of mirroring that of minor league baseball
franchises over the next fifteen years.
The underpinnings for the escalation in minor league baseball franchise value has
been a revival of fan interest. From a peak attendance of 39.8 million in 1950, this
figure plunged to a nadir of 9.7 million in 1963. In 1997, attendance reached 34.7
million from just 12.3 million in 1980. In the last ten years, eighty new stadiums
have been built.
Profitability of a franchise is directly linked to fan interest, which translates itself
into ticket sales, food and beverage sales at the park, the sale of merchandise
bearing team logo at the park and elsewhere, licensing fees and advertising income
(for example, the sale of space on the outfield fence and in the score card). All of
these revenue sources key off of attendance figures. Successful operators sell the
team not the allure of individual players because this builds the longer-range value
of the franchise. The other major component of profitability is the stringent control
of operating costs.
We believe the revival in attendance in minor league baseball is based on the need
for affordable quality entertainment by families in the midst of an almost continuous
climb in the cost of going to a major league game. For instance, the cost of
attending a minor league baseball game for a family of four would be under $30,
including refreshments. This could easily cost $100 for a major league baseball
game. Moreover, the cost would be multiples of that to go to a major league
basketball, football, or hockey game, assuming the availability of tickets. The
divergence in ticket prices between the minor and major leagues may even widen
further, given the spiraling player payroll costs of free agency.
In the early1980's, many astute investors realized that owning a minor league
baseball club represented a very attractive investment opportunity. These investors
went into this business because of the potential for substantial returns on their
investment. Over the past fifteen years, no minor league franchise has gone out of
business. Most farm clubs presently operate in the black. The value of minor league
baseball franchises have literally soared from a zero value base in 1980.
In our view, the valuation for USBL franchises is similar to those of minor league
baseball franchises in the early 1980s. We believe that many astute
businessmen/investors will be attracted to the positive fundamentals for the USBL
franchises over the next two years, particularly if the USBL elects to launch a
second season.
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Among the most successful USBL teams are Atlantic City, New Jersey, operating
for just three years and the winner of the 1997 USBL Championship, and the
Jacksonville, Florida Barracudas, which has been operating for nine years. The
Atlantic City team expects to reach profitability this year, based on a well
conceived marketing plan an on its ability to field an excellent cadre of players.
The owner of the Atlantic City team has purchased a second franchise that should
be operating in Delaware in time for the 1999 season. The Jacksonville team,
owned by two former NBA players, Rex Morgan and Artis Gilmore, has won two
championships. The resale value of those teams is estimated to be in the vicinity of
$750,000 to $1,000,000.
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Going to a second season, we believe would boost the franchise fees from
$300,000 to $500,000 level to at least $1,000,000. The increase in the number of
games played would more than double revenues form royalties/dues. Revenues
from what are smaller sources of revenue at present such as media
revenue/corporate sponsorships, rights/fees from TV and licensed income should
also increase by at least 100% over the next 12 to 24 months.
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Yes, you sure know what you are talking about.
Look, maybe other stocks have jittery shareholders that will panic sell at the drop of a hat, but if you
think your mindless B/S will work here, you are sadly mistaken.
Most of the float is now held by strong hands that really don't give a rip what mindless people have to
say. |
