NFL team sales may stall as valuations soar | Wilnesh News

The Seattle Seahawks could be the next National Football League team to be sold. Beyond that, it’s anyone’s guess when another team might change hands.

Former Seahawks owner and Microsoft co-founder Paul Allen died in 2018. Allen’s estate requested that the team eventually be sold and the proceeds be donated to charity. But there is no clear timetable in order to conduct transactions.

Allen’s trust has reason to wait — which is also the logic why other team owners might not sell anytime soon.

Marc Ganis, a sports consultant who advises NFL Commissioner Roger Goodell and the league’s owners, said the NFL’s valuation will likely continue to rise in the coming years due to the league’s media rights deals, expansion and added games. If the owners divest the team now, they risk missing out on huge gains.

“We are still far from the peak of the NFL market,” Ganis said. “The NFL is still in a growth stage in terms of appreciation and net income.”

According to CNBC’s official 2024 NFL team valuations, the current average value of an NFL team is $6.49 billion, with no team worth less than $5.25 billion. In terms of percentage gains since the sale, seven of the 10 recently sold NFL teams have outperformed the S&P 500.

Driven by growth in leaguewide media, sponsorship and licensing deals that are split between all 32 teams, the team averaged $640 million in revenue last year and had operating income of $1.27, according to people familiar with the team’s finances. billion dollars.

The NFL’s new media rights deal went into full effect last year. This is an 11-year agreement that runs until 2033 Valued at more than $110 billion – an 80% increase over the league’s previous deal. There is also a clause that allows the league to opt out of all packages except disneyAt the end of the 2028-2029 season; the NFL’s deal with Disney has an exit clause beyond 2030.

This option will give owners another chance to make money after the National Basketball Association almost tripled The value of its owned media rights in July. Hypothetical future bids from deep-pocketed tech companies, e.g. Amazon, Netflix and letterYouTube could cause the value of the NFL’s most-watched game to skyrocket. TV ratings continue to rise: the 2023-24 season ratings will increase by 7% annually, ending with Second highest rated since Data were first tracked in 1995.

“For advertisers, the NFL is the largest and most valuable audience in the United States,” said Neal Pierson, former president of CBS Sports and founder and president of Pilson Communications. Pilson) said. “NBA trades are going to be a benchmark, but by the time the NFL comes through, even opting out, it’s going to be ancient history. That’s still four years away. Everybody knows how good the NBA is. But ultimately, The NFL’s rights agreement will depend on its audience and the revenue third parties believe it can earn as a partner.

It is expected to increase by one 18th regular season game In the coming years, Goodell is interested in increasing the NFL’s international profile through: Add new game Ganis said leagues in Spain, Germany and Brazil should also lead to increased league revenue and improved valuations.

“The NFL has only scratched the surface in terms of international revenue,” he said.

The past four NFL teams have set new sales records, reflecting rising valuations. Billionaire businessman Terry Pegula and his wife Kim, obtained In 2014, Buffalo Bills lost $1.4 billion after death Ralph Wilson, founder of the franchise. The highest figure was reached in 2018 when hedge fund manager David Tepper purchased the Carolina Panthers for $2.3 billion. Panthers sold after NFL fines former owner Jerry Richardson For inappropriate conduct in the workplace.

Rob Walton, a member of the family that owns the company Walmartleads a group to acquire the Denver Broncos for $4.65 billion in 2022 Pat Bowlen dies.

These investments have exploded in just a few years. Today, the Bills are valued at $5.35 billion, the Panthers are valued at $5.9 billion, and the Broncos’ valuation has increased to $6.2 billion, according to CNBC’s 2024 valuations.

Ganis said the NFL prefers owners who have been around for decades because they prefer long-term decisions over short-term profits. Modern estate planning for tax reduction brings more The handover of families from one generation to another, he said.

This further reduced franchise-wide sales. The NFL requires every team to have a written succession plan in case its owner dies. The Chicago Bears are currently owned by a 101-year-old man Virginia Halas McCaskeythe daughter of team founder George Halas. According to the plan, when McCaskey dies, ownership of the Bears will be divided among her children and controlled by her eighth-eldest child, George McCaskey, 68, now Team president.

“The league’s decision-makers have a huge stake in this game,” Ganis said. “They are not salaried employees with voting rights. They are making a choice to think generationally.”

Limited franchise turnover and soaring valuations have Goodell leaning toward allowing private equity ownership for the first time. NFL owners voted last week to allow certain private equity firms to buy up to 10% of a team. Each fund or syndicate can trade with up to six teams.

Teams such as the Miami Dolphins, Bills and Los Angeles Chargers may consider selling minority stakes to private equity firms, people familiar with the matter said. The bill is Consider selling up to 25% Total number of teams.

Spokespeople for the three teams declined to comment.

The first companies approved to invest are Ares Management, Sixth Street Partners and Arctos Partners. as well as The consortium includes Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis, a platform founded by investor and former NFL running back Curtis Martin. Tracy Gallagher, head of private investments at digital wealth management platform Arta Finance, said the list is likely to grow over time.

“The NFL is clearly prioritizing liquidity,” Gallagher said. “This is the first of many steps to add more buyer options.”

The league is proceeding cautiously and taking baby steps toward private equity ownership. The NBA, NHL and Major League Baseball allow private equity firms to hold up to 30% ownership. The NFL limits ownership of selected companies to 10% and intends to take a percentage of the so-called arbitrage, the profit a fund manager retains after its limited partners reach return thresholds.

Robert Kraft, owner of the NFL’s New England Patriots, said in an interview with CNBC on August 28: “I think our league is unique because we still have 32 individual owners. We have a very Special culture, we want to be vigilant.

“Some ownership groups do face illiquidity issues,” he said. “They have a big family and have to solve a lot of uncommon problems. So we thought this was a good source of funding that could be done in a very practical way that wouldn’t impact (the team’s) operations,” he added road.

Kraft told CNBC the reason the league is hesitant to allow more than 10% private equity ownership is to emphasize a team’s role in the local community rather than making money.

“From our perspective, limiting investment to 10% is a way to control investment,” he said.

Gallagher said that although NFL team valuations have a clear upward trajectory, the league’s strict restrictions may limit investment interest.

“These are the crown jewel assets, but at the end of the day, private equity managers get rich from arbitrage,” Gallagher said. “If you take away some of that, you lose the incentive to buy these assets. “

Gallagher also noted that other standard private equity investments come with downside protection and provide board seats if valuations plummet. The NFL currently has no plans to allow private equity firms to have governance rights.

“It will be very interesting to see what exactly funds are buying and how they are protected to generate returns for the end investor,” Gallagher said.

Watch: New England Patriots owner Robert Kraft talks NFL’s new rules for private equity