State Farm will sponsor Clippers again

After the Donald Sterling disaster, State Farm pulled is sponsorship of the team as long as Sterling was the owner. The insurance giant has agreed to return to the Clippers after the franchise was purchased by Steve Ballmer, the former CEO of Microsoft.

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The lucrative sponsorship deal should be a sign that Ballmer made a good $2 Billion dollar investment in the franchise. But the question is, why was the Clippers’ valuation so high to begin with? According the Forbes, Ballmer bought the team at fifteen times the revenue. Forbes valued the team at 575 million, meaning that Ballmer grossly overpaid for the franchise.

I guess it’s every billionaire’s dream to own a sports franchise, because they are clearly willing to pay anything to get one. Donald Sterling is oddly the winner here, after netting four times what the franchise is worth.

Many different factors went into the valuation, but it’s likely that the forced sale and media hype increased the price for potential buyers several times. But under the logic of the Clipper sale the world’s most valuable team, Real Madrid, would sell for around 14 billion.

No matter how many sponsors return, Ballmer still made a mistake in buying the Clippers for $2 Billion.