New frontier of franchise values

The economics behind the Clippers' value, the future of franchise sales

Updated: May 30, 2014, 4:44 PM ET
By Kevin Pelton | ESPN Insider

Steve BallmerNoel Vasquez/GC Images/Getty ImagesHas Steve Ballmer's bid pioneered a new era in NBA franchise values?

On April 16, the Milwaukee Bucks sold for an NBA-record $550 million. Barely six weeks later, that figure was blown away Thursday, with Steve Ballmer agreeing to pay $2 billion -- nearly four times as much -- for the Los Angeles Clippers. Whatever happens with Ballmer's purchase, which still awaits NBA approval and requires previous owner Donald Sterling to be declared mentally incapacitated, a new frontier has been established for franchise values.

Can the incredible purchase price, which blew away even optimistic estimates for the Clippers' value, be justified?

Here are three explanations.

Rising tide of NBA valuations

Even before the Clippers unexpectedly hit the market,