Kelley L Cox, Kelley L Cox-USA TODAY Sports

The Los Angeles Lakers have been the crown jewel of the NBA for decades, but according to Forbes' annual franchise valuations, that might be changing. The Lakers and New York Knicks have traded the top spot on the list back and forth since its inception, but this year, a new challenger has broken their stranglehold at the top of the list. The Knicks remain at No. 1 with a $5 billion valuation, but the Lakers have fallen to No. 3. They are currently valued at $4.6 billion. Coming in at No. 2? The Golden State Warriors, who are worth $4.7 billion. 

So what is behind this changing of the guard? There are a few possible factors. The population of the Bay Area is rising, while it has declined in each of the past three years in Los Angeles. The Warriors have steadily become a more recognizable global brand over the past decade as Stephen Curry has grown into an all-time great, whereas the Lakers have had so many superstars over the years that the presence of LeBron James does not materially change their reputation. But the single factor most responsible for the Warriors leapfrogging the Lakers is their respective arenas. 

The Lakers play at Staples Center, but they don't own it. AEG does, and the Lakers, therefore, have to pay them a percentage of revenue from home games. That arrangement isn't financially crippling, and it isn't even as bad as the one the Clippers have with AEG wherein they have to pay rent to play at Staples Center, but it limits the value of the franchise itself. AEG is a part-owner of the Lakers, so it does not limit the Lakers' operating financial flexibility, but if the team was sold, the situation would be complicated. 

The Warriors, on the other hand, privately built the Chase Center and own it themselves. They also own a significant amount of land around the arena, which they've leased out as office space. Land in San Francisco is extremely valuable, and this is premium, water-front property. While COVID-19 has limited their ability to monetize their arena and land holdings, when the pandemic ends, their possible revenue streams are simply greater than what the Lakers can generate at Staples Center.

A franchise's valuation only matters if the team is sold, though, and even then, the number is by no means concrete. A franchise is ultimately worth what an owner is willing to pay for it. In 2013, Forbes valued the Clippers at $430 million. They ranked 18th in the NBA. A year later, Steve Ballmer paid $2 billion to buy the team. That was a bargain in the end, as Forbes now values the Clippers at $2.75 billion.

While the NBA does not publicly reveal team revenue, it is likely that the Lakers remain the more profitable team at the moment. Their enormous local cable deal with Spectrum SportsNet has been the envy of the league for years while the Warriors have played through an older deal with Comcast, and without being able to operate Chase Center at full capacity, they can't take advantage of all of the revenue streams their arena will open up quite yet. Throw in an absolutely enormous tax bill for the Warriors (who are in perpetual danger of triggering the repeater tax) and a more modest one from the defending champion Lakers, and right now, the Lakers are likely in a stronger overall financial position.

But a franchise's valuation is based on perceived future profitability, and Golden State's arena situation is so strong that Forbes now believes they are worth more than the Lakers. That could change as the world recovers and reorganizes following the COVID-19 pandemic, but for now, the Lakers will have to settle for No. 3.