Grind City Media, which is owned by the Memphis Grizzlies, is expanding its operation and with it, the value of the Grizzlies as a business.
Diversification of assets is just as important for building a highly-profitable business as it is for individual investment portfolios. With a new investment and commitment to Grind City Media, the Memphis Grizzlies could see a substantial jump in their valuation.
According to a press release from Grind City Media penned by Michael Wallace, the Grizzlies are investing in the company by constructing a new production studio in which all the content it has delivered and a wealth of new content will be produced.
Now in its second year, Grind City Media started out by primarily focusing on Grizzlies content. Now, the company will be producing college football content. Several SEC teams, like the in-state Tennessee Volunteers and the Ole Miss Rebels will be featured in the new content. Additionally, the content will show some local love to the Memphis Tigers.
The new content produced in the new studio will encompass several different mediums, including podcast and video content. While covering college football is a crowded space, few startup outlets have the resources and credentials of being backed by an NBA franchise. That makes the relationship a profitable one for both parties.
Grind City Media could help the Grizzlies in one important way. It gives the Grizzlies a stream of revenue that isn’t at all dependent on the on-court performance of the NBA team. It’s that kind of revenue which allows a sport entertainment corporation to be considered among the elite from a business perspective. The Grizzlies were ranked 26th out of 30 NBA teams in Forbes’ latest valuation rankings.
The ranking isn’t as important as other numbers, however, which showed the Grizzlies posting a total revenue of $790 million with an operating income of $200,000. That operating income was the fifth-lowest in the NBA. The revenue that could come from Grind City Media’s robust college football coverage could exponentially grow that operating income, and have a positive snowball effect. The extra money could lead to the Grizzlies being able to field a competitive squad on the court more sustainably, which would mean more revenue from that product.
In return, the brand power and connections that the Grizzlies afford Grind City Media will allow the content to be monetized easily. Presenter sponsorships for specific content along with ad space during the content should produce more attractive numbers in the bottom line.
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It will be interesting to compare the numbers on the Grizzlies’ valuation next year to see if there is significant growth which may be at least partially attributed to the growth of Grind City Media. If that ends up being the case, then this was a very wise investment by the Grizzlies.