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The Most Valuable Sports Franchises In The United States
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The thought process behind owning a professional sports team has undoubtedly changed over the last several decades. What used to be about fun and glory has quickly turned into one of the world’s best and most diversified investment vehicles.
Take the National Football League, for example — the average franchise valuation has gone from about $420 million in 2000 to roughly $3.5 billion today. That’s a 620% gain in total (10.2% CAGR) and vastly outpaces the S&P 500s return of 210% (5.2% CAGR) during the same period.
National Football League Average Franchise Value
Many factors go into the increase of valuations. The NFL now brings in more than $2 billion in annual sponsorship revenue. They signed massive merchandise and licensing deals with Nike and Fanatics. And the league now earns more than $10 billion annually from its media rights alone.
With built-in escalators, each NFL team will receive annual payments that start at $250 million next year and increase to $350 million by the end of the decade.
But it’s not just football. Sportico released its annual Major League Baseball franchise valuations yesterday. And with the sports business publication now having complete valuation metrics for every major US professional sports league, we can compare how each of the individual leagues and teams stacks up against each other.
Here are the ten most valuable sports franchises in the United States:
Furthermore, this is the average franchise valuation for each US pro sports league.
Average Franchise Value
NFL: $3.5 billion
NBA: $2.6 billion
MLB: $2.3 billion
NHL: $930 million
MLS: $550 million
And here’s an interesting chart that Sportico reporter Eben Novy-Williams tweeted yesterday, showcasing the most valuable & least valuable franchises for each league.
Some of this data isn’t all that surprising. For example, most of us probably knew that major market teams like the New York Yankees, Dallas Cowboys, New York Knicks, and Los Angeles Lakers were among the most valuable entities in sports. But it’s fascinating to see just how big these numbers have become.
New York Yankees Valuation
2010: $1.6 billion
2022: $7.04 billion (+340%)
Dallas Cowboys Valuation
2010: $1.8 billion
2022: $6.92 billion (+284%)
New York Knicks Valuation
2010: $586 million
2022: $6.12 billion (+944%)
Los Angeles Lakers Valuation
2010: $607 million
2022: $5.63 billion (+827%)
Golden State Warriors Valuation
2010: $450 million
2022: $6.02 billion (+1,237%)
Again, even if you were able to time the market perfectly and bought the S&P 500 right at the bottom of the 2008 financial crisis, these top-level sports teams still outperformed from a value appreciation perspective by a magnitude of 2-3x.
Past performance does not guarantee future results, of course. But there is a reason why so many private equity funds are establishing multi-million-dollar positions in several different professional sports teams — they think this trend will continue.
These assets typically provide extremely stable & predictable cash flow outside of pandemic-related disruption. They offer incredible tax benefits, and they have a 100-year history of non-correlation to the broader stock market. Not to mention the obvious — it’s probably pretty fun solely from an entertainment perspective.
We’ve talked about this several times now. But my guess is that these charts will continue up and to the right. Tailwinds like streaming, sports betting, and crypto are propelling revenue, operating income, and overall valuations higher.
There are trillions of dollars in dry powder floating around the institutional world, and those dollars will increasingly be allocated toward blue-chip sports assets. We are already seeing this, to a degree, but the next several years should be fascinating to watch. I’ll make sure to keep you updated along the way.
I hope everyone has a great weekend. I’ll talk to you on Monday.
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