In 2010, basketball legend Michael Jordan purchased a majority stake in the Charlotte Bobcats NBA franchise for a reported $175 million. This purchase price made headlines at the time, as it was a record amount paid for an NBA team. So how did MJ acquire the team, and what went into determining the $175 million price tag?
MJ’s Motivation to Buy an NBA Team
Throughout his legendary playing career with the Chicago Bulls, Michael Jordan never hid his competitive drive and passion for the game of basketball. Even after retirement, MJ sought opportunities to stay involved in the sport. When the opportunity came up to purchase the Charlotte Bobcats in 2010, he jumped at the chance despite having no previous experience as an NBA executive or owner. Some key factors motivated him to become an owner:
- His ties to North Carolina – Jordan grew up in Wilmington, NC and played college basketball at the University of North Carolina in Chapel Hill.
- Chance to run and shape his own franchise – After frustrations with the Bulls front office post-retirement, he wanted to take the reins of his own team.
- Opportunity to increase franchise value – The Bobcats were struggling at the time, and MJ saw potential to improve the team’s value by turning things around.
The purchase aligned perfectly with MJ’s competitive nature and desire to take on new challenges in basketball. As a six-time NBA champion, he wanted the opportunity to build his own championship organization in Charlotte.
Negotiations with Owner Bob Johnson
MJ did not immediately become the Bobcats owner when the franchise was founded in 2004. The original owner was Robert “Bob” Johnson, founder of the BET television network. Johnson was awarded the new Charlotte franchise as part of the NBA’s 2004 expansion into Charlotte. He paid around $300 million in original expansion fees to launch the team.
By 2010, after years of struggling attendance and on-court performance, Johnson was ready to sell the team. He entered negotiations with Jordan, allowing him to buy a majority stake in the franchise. Jordan purchased over 70% of the team, becoming the first former NBA player to serve as majority owner of an NBA franchise.
Key Details of Negotiations
- Jordan purchased just over 70% of the franchise, with Johnson retaining a minority stake.
- The reported purchase price was $175 million for Jordan’s share.
- Jordan brought in several minority investors to facilitate the deal, including BET founder Robert Johnson.
Bringing Jordan on as majority owner offered Johnson an opportunity to inject new energy and direction into the struggling Bobcats. It also marked the beginning of a new era for MJ as he transitioned into sports ownership and management.
Factors That Shaped the $175 Million Valuation
Several key factors went into determining the $175 million valuation at which MJ purchased majority control of the franchise:
Expansion Fees for New Franchises
Back in 2004, Bob Johnson paid over $300 million in expansion fees to launch the Charlotte Bobcats. This upfront payment granted him rights to operate the expansion franchise going forward. While Johnson likely lost money over the years running the Bobcats, the $300 million baseline carried weight in valuing the team during sale talks with MJ.
Arena/Revenue Considerations
The team’s venue, Time Warner Cable Arena, was only 5 years old at the time Jordan bought the team. While the Bobcats paid $265 million to help build the arena, owning a newer facility typically boosts team valuation calculations. Related factors like market size, revenue streams, and sponsorship deals also contributed to franchise value.
NBA Franchise Valuations in 2010
Back in 2010, NBA franchise valuations were on the rise after some down years following the 2008 financial crisis. The average NBA team value increased around 5% from 2009 to 2010. This trend signaled an opportune time for Jordan to buy in.
| Year | Average NBA Franchise Value |
|---|---|
| 2009 | $369 million |
| 2010 | $393 million |
Based on average franchise values alone, Jordan’s purchase price was a bargain compared to expansion fees paid just a few years earlier.
Brand Power of Michael Jordan
Arguably the most unique factor was Michael Jordan’s star power and ability to transform team revenues both on and off the court. MJ is known globally as the greatest NBA player of all time. His involvement with the Bobcats generated increased local buzz, ticket sales, sponsorship deals and more for the small-market Charlotte team.
Jordan’s brand power added intangible value beyond profit and loss sheets. His presence offered the Bobcats an instant path to relevance in the NBA landscape. As majority owner, Jordan could directly leverage his basketball legacy and business relationships to uplift the Bobcats.
How The Deal Transformed the Bobcats Franchise
Within months of taking over in 2010, Jordan began making his mark on the team:
- He hired veteran talent evaluator Rod Higgins as General Manager
- Higgins selected Kemba Walker in the 2011 NBA Draft, landing the Bobcats a new franchise cornerstone player
- The Bobcats improved from 34 wins in 2009-10 to 43 wins in 2011-12
- Jordan led a successful 2013 vote to change the team’s name back to the original Charlotte Hornets
- The rebranded Hornets have become consistent playoff contenders and increased substantially in value
Jordan’s purchase transformed the franchise from a struggling expansion team into a rising organization with greater relevance across the NBA landscape. Under Jordan’s leadership and influence, the team ultimately returned to its original Hornets name and identity.
Financial Impact
Increased ticket sales, sponsorships, media deals and merchandise sales helped elevate the team’s financial position. After losing money for years under Bob Johnson, Jordan helped the franchise become profitable again by 2012. The increased business success translated into a higher team valuation.
Valuation Growth Since 2010
| Year | Franchise Valuation |
|---|---|
| 2010 (Purchase Price) | $175 million |
| 2022 | $1.7 billion |
In just over a decade of Jordan’s stewardship, the Hornets’ estimated valuation has increased nearly tenfold. Jordan’s purchase price of $175 million is now seen clearly as a bargain-bin deal considering how valuations have skyrocketed league-wide.
Lasting Impact on the NBA
Beyond the Hornets franchise itself, Michael Jordan’s purchase has shaped the modern NBA in important ways:
- Player Empowerment – Jordan’s role as an ex-player owning a team empowered more NBA stars to seek ownership roles, continuing today with LeBron James, Dwyane Wade and others.
- Celebrity Owner Precedent – MJ proved celebrities can successfully transition into sports team ownership, paving the way for others like Shaquille O’Neal.
- Charlotte NBA Presence – Jordan has kept professional basketball relevant in Charlotte despite initial struggles post-expansion. The Hornets are now entrenched as the city’s core franchise.
Overall, Jordan’s tenure as Hornets majority owner is a success story illustrating his business acumen and passion for the game. His $175 million investment in 2010 fundamentally changed the franchise’s trajectory and strengthened its presence in Charlotte.
Conclusion
In 2010, Michael Jordan purchased a controlling stake in the Charlotte Bobcats for $175 million. This deal gave the NBA legend over 70% ownership of the struggling expansion franchise. Jordan’s purchase price was influenced largely by the original $300 million expansion fees, standard NBA franchise valuations at the time, and the financial/brand power MJ brought as the GOAT player. His hands-on involvement as owner later led to increased success on and off the court, culminating in the Hornets rebrand that tied back to Charlotte’s original NBA days. Over a decade later, the Hornets are now estimated to be worth over $1.7 billion. Jordan’s initial investment of $175 million stands as one of the most important transactions in the franchise’s history.
