Dallas Cowboys No. 18 Ryan Flournoy passes the Los Angeles Chargers No. 23 during the first half of a preseason game at AT&T Stadium in Arlington, Texas, on August 24, 2024. Matt Hankins catches a touchdown pass on defense.
Ron Jenkins | Getty Images Sports | Getty Images
Today, a National Football League team is worth $6.5 billion.
This is the average value of the NFL’s 32 teams, according to CNBC’s official 2024 NFL team valuations. Professional football teams have always been a lucrative asset for the owners of America’s most popular sports league: The returns they see on their initial investments dwarf the gains from traditional stocks over corresponding periods.
Take the Houston Texans, who rank No. 11 in CNBC’s 2024 value rankings. Back in 1999, the year the NFL last expanded, the late Robert McNair agreed to buy the team’s franchise for $600 million, a price that took into account the payment structure and growth over time. Move the value of the transaction. The Texans are now worth $6.35 billion, more than 10 times McNair’s transfer fee and more than three times the team’s revenue. S&P 500 Index Since that year.
Not bad for a team that went 152-202-1 in 22 seasons and never made it to the Super Bowl.
Texans are not alone.
Of the past 10 NFL teams up for sale, seven of the 10 have outperformed the S&P 500 in terms of percentage gains since sale. The Washington Commanders and Denver Broncos, ranked 13th and 14th respectively on CNBC’s 2024 team valuation rankings, have lagged the broader market’s gains, especially after being sold in the past two years. The Miami Dolphins, ranked eighth on CNBC’s rankings, also lagged the S&P but were last sold in 2009 as the stock market was bottoming out after taking a beating during the 2007-08 financial crisis.
Valuation rises
The increase in football team value is largely a result of the league Large and growing media deals.
NFL’s current television deals Comcast, disney, Paramount and fox, Deals starting last season were worth an average of $9.2 billion per year, an 85% increase over previous deals.
Added streaming processing Youtube Buy NFL Sunday Ticket and Amazon Prime Thursday Night Football, the NFL will earn an average of $12.4 billion per year through 2032 – nearly double the $6.48 billion per year in the previous media rights cycle.
In addition to these big deals, the league is also increasing media revenue by selling more streaming games.
Last season, the NFL sold exclusive streaming rights to a wild-card playoff game to Comcast’s Peacock streaming service for $110 million, according to a person familiar with the matter.
League sells three exclusive live packages this season: two Christmas games Netflix A total of $150 million; Wild Card games on Amazon Prime sold for $120 million; people familiar with the matter revealed that the cost of watching an international regular season game on Peacock was $80 million. The league should receive about $200 million for the commercial rights to Sunday Ticket, which would bring a series of NFL games into bars and restaurants, according to people familiar with the matter.
All these agreements combined bring total media rights fees per team to $357 million, up from $325 million in 2023.
CNBC sources spoke on condition of anonymity to discuss undisclosed details of the deal.
A detailed view of the broadcast camera showing the NFL emblem and ESPN Monday Night Football logo during the game between the Chicago Bears and Minnesota Vikings at Soldier Field in Chicago on December 20, 2021.
Graphic Sports Line | Graphic Sports Line | Getty Images
A rising tide lifts all boats in the NFL. The 32 teams share an even share of revenue from national media deals, as well as funding from league-wide sponsorship and licensing deals, and 34 percent of ticket sales. In 2023, the NFL will split $13.68 billion, or 67%, of its $20.47 billion in revenue.
When such a large revenue share is combined with a salary cap that limits player spending to about 49% of revenue, small-market teams such as Green Bay; Wisconsin; and Buffalo, N.Y., can compete with large-market teams in New York and Los Angeles compete. The small-market Kansas City Chiefs, ranked No. 18 in CNBC’s 2024 Valuation Rankings, have won the past two Super Bowls and three of the past five Super Bowls.
But there remains a huge gulf in team values, largely due to the stadium. Teams do not share revenue from luxury suites, on-site restaurants, merchandise stores, sponsorships or non-NFL events at the stadium.
Last year, that made a bigger difference than usual.
Taylor Swift performs on The Eras tour at SoFi Arena on August 7, 2023 in Inglewood, California.
Alan J. Cockroach | Los Angeles Times | Getty Images
Pop star Taylor Swift performed at multiple NFL stadiums last year as part of her blockbuster Eras tour, including SoFi Stadium in Los Angeles, Raymond James Stadium in Tampa Bay, and Gillette Stadium in New England and Lincoln Financial Field in Philadelphia. The One Eras Tour brings in $4 million per show to host stadiums, according to a person familiar with the matter who asked not to be named.
The Dolphins’ Hard Rock Stadium, also a stop on the Eras tour, brought in more than $30 million in revenue last year from college football games, soccer games, concerts, festivals and tennis tournaments, and this year it is set to top that, according to a person familiar with the matter. The number may double.
return on investment
Revenue sharing and salary cap agreements also make the league very profitable.
In the 2023 season, the NFL’s 32 teams have average revenue of $640 million and average operating income (interest, tax, depreciation and amortization in advance) of $127 million. The typical NFL team’s EBITDA margin is 19%.
The NFL’s financial success means higher premiums for team sales.
Two years ago, Walmart Heir Rob Walton purchased the Denver Broncos for $4.65 billion, or 8.8 times the team’s revenue. But these days, it’s hard for a potential owner to pay less than 10 times revenue for a team. The average revenue multiple for all 32 teams in CNBC’s 2024 rankings is 10.2.
Last year, private equity billionaire Josh Harris bought the Washington Commanders for $6.05 billion, or 11 times revenue. Earlier this year, hedge fund manager Ken Griffin made an unsolicited $6.05 billion offer to the Tampa Bay Buccaneers, valuing the team at 9.8 times its revenue, according to a person familiar with the matter. The offer was rejected by the Glazer family, which owns the franchise.
According to multiple media reports, Griffin also offered the Miami Dolphins $7.5 billion earlier this year, equivalent to 11 times revenue.
When the team did change ownership, it proved to be a wise investment.
The Dallas Cowboys, the league’s most valuable team, are worth $11 billion, 73 times what owner Jerry Jones paid for the team in 1989.
Dallas Cowboys owner Jerry Jones attends training camp at the River Ridge Complex on July 24, 2021 in Oxnard, California.
Jayne Cumming-oncea | Getty Images
Last year, the Cowboys had the highest revenue in the league at $1.22 billion and the highest operating income at $550 million, in large part because of sponsorship revenue. According to CNBC sources, Dallas’ sponsor revenue is approaching the NFL’s leading $250 million.
The Los Angeles Rams rank second on CNBC’s 2024 valuation rankings and also rank second in revenue at $825 million. The Rams also rank second in the league in sponsorship revenue and have generated significant revenue through more than 25 non-football events at SoFi Stadium, including six sold-out dates on Swift’s Eras Tour. Night and 3 dates on Beyoncé’s Renaissance Tour, as well as Ed Sheeran, Metallica and Pink.
The Rams were in St. Louis when sports and entertainment mogul Stanley Kroenke bought them for $750 million in 2010, and the Rams are now worth $8 billion. Even taking into account the $550 million in relocation fees Kroenke had to pay the league to move the team to Los Angeles, as well as the $571 million settlement related to the legal challenge to the relocation, his investment more than quadrupled.
The rising value of NFL teams explains why private equity firms are rushing to invest in the league.
For several years now, Major League Baseball, the National Basketball Association, the National Hockey League and Major League Soccer have allowed institutional investors to buy limited partnership stakes in teams. There are also European football leagues such as the Premier League.
The NFL followed suit last week. Alliance owners vote to allow select private equity firms – Ares Management, Sixth Street Partners, Arctos Partners and an investment syndicate consisting of Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis – to hold up to 10% of the shares . The companies have committed $12 billion over time, people familiar with the matter told CNBC.
Allowing private equity firms to invest in the league should make it easier to finance the purchase of a team.
Even the Cincinnati Bengals, the lowest-valued team on CNBC’s list, are worth $5.25 billion.
Considering the maximum debt allowed by the league is $1.4 billion, the equity load is $3.8 billion. Assuming the general partner holds the minimum required 30% stake, limited partners would need to commit a total of $2.7 billion to participate.
Revealed: Peacock is the streaming service of CNBC parent company NBCUniversal.
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