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Forbes: The Cavaliers were the only NBA team with an operating deficit last season

Cavaliers owner Dan Gilbert’s team is reportedly valued at $1.325 billion. (AP)
Cavaliers owner Dan Gilbert’s team is reportedly valued at $1.325 billion. (AP)

NBA business is booming, according to Forbes magazine’s annual valuations, but for one team.

While the league’s revenue increased 25 percent to $7.4 billion last season, the Cleveland Cavaliers were the only team with an operating deficit, despite reaching a third straight Finals, per the report.

The Cavaliers lost $6.2 million due in large part to a $159 million payroll and luxury tax bill, according to Forbes. The Memphis Grizzlies, Charlotte Hornets and Milwaukee Bucks are reportedly among teams that became profitable thanks to revenue and luxury tax sharing from the likes of the Cavaliers.

ESPN reported in September that NBA records revealed 14 of the league’s 30 teams lost money prior to revenue and luxury tax sharing, while nine finished with deficits even after funds were redistributed. It is possible (probable) that Forbes determines net profits differently than the league. The magazine determines its operating income on “earnings before interest, taxes, depreciation and amortization.”

The Bucks and Detroit Pistons had operating surpluses, although they respectively lost money due to one-time costs incurred from a recent ownership change and arena relocation, according to Forbes. The Brooklyn Nets profited only when revenue from non-NBA events at Barclays Center was included.

Revenue sharing has been a contentious issue among the league’s owners for years, mostly dividing small- and big-market owners across that line. ESPN’s report, which had almost half the league losing money, fueled that fire, since the NBA’s new $24 billion TV contract was supposed to bear fruit for all.

The Forbes valuations, though calculated differently, tell another story.

For the first time, every NBA team is worth at least $1 billion, the magazine reported, and the average franchise is valued at $1.65 billion — a 22 percent increase from just last year — led once again by the New York Knicks at $3.6 billion. The Los Angeles Lakers ($3.3 billion), Golden State Warriors ($3.1 billion), Chicago Bulls ($2.6 billion) and Boston Celtics ($2.5 billion) round out the top five.

The Houston Rockets sold for $2.2 billion in September, breaking the $2 billion record established by the L.A. Clippers in 2014. Alibaba co-founder Joseph Tsai bought 49 percent of the Nets for $1.13 billion in October, working off a $2.3 billion valuation. The Forbes numbers, once thought to undersell teams, now value the Nets, Rockets and Clippers at $2.3, $2.2 and $2.15 billion, respectively.

Other key notes from the Forbes valuations:

• The Knicks, Lakers and Warriors all earned more than $100 million last season.

• The New Orleans Pelicans are pegged as the least valuable franchise at exactly $1 billion.

• The Philadelphia 76ers had a league-best year-over-year increase in value of 48 percent.

The Forbes report is another blow to a Cavaliers team that finds itself at a crossroads, even as the magazine values the organization at $1.325 billion. The news comes amid reports of a growing divide between Cavs owner Dan Gilbert and superstar LeBron James, in part over financial concerns.

According to The Athletic’s Jason Lloyd, Cleveland’s front office is no longer consulting James on personnel matters after issuing exorbitant contracts to, among others, Tristan Thompson and J.R. Smith, both of whom share an agent with James. Meanwhile, James is pressuring the team to make moves that could add payroll (and luxury tax) or risk losing him in free agency this summer.

The loss of James, while improving the team’s salary cap situation, could prove a massive blow to the team’s earning potential. Ticket sales, TV viewership and playoff revenue would all surely plummet.

NBA owners as a whole can hardly cry foul now. The real losers here are the players, who gave up six percent of the league’s basketball-related income during the 2011 lockout, caving to pressure from owners who claimed to be losing money hand over fist. According to Forbes, the average NBA franchise is now worth more than triple what it was five years ago, and while a number of owners could point to annual revenue deficits as evidence of lost profits, even they can’t do that now.

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Ben Rohrbach is a writer for Yahoo Sports. Have a tip? Email him at rohrbach_ben@yahoo.com or follow him on Twitter!