Currently, NFL teams are a $6.5 billion business.
That’s the average value of the NFL’s 32 teams, according to CNBC’s “Official NFL Team Valuations 2024.” Professional football teams have become lucrative assets for owners of America’s most popular sports league, with the returns on initial investments far exceeding those made on traditional stocks over the same period.
Take, for example, the Houston Texans, who rank 11th on CNBC’s 2024 value rankings. In 1999, the last time the NFL expanded, the late Robert McNair agreed to buy the franchise rights for a purchase price of $600 million, which took into account the payment structure and long-term value of the contract. The Texans are now worth $6.35 billion, more than 10 times McNair’s compensation and more than three times the team’s profits. S&P 500 Ever since that year.
Not bad for a team that compiled a record of 152 wins, 202 losses and one tie in 22 seasons and has never appeared in a Super Bowl.
And it’s not just Texans.
Of the last 10 NFL teams to be sold, seven have outperformed the S&P 500 on a percentage basis in the period since the sale. The Washington Commanders and Denver Broncos, ranked 13th and 14th, respectively, on CNBC’s 2024 team valuation list, have lagged the overall market gains and, notably, have sold within the past two years. The Miami Dolphins, ranked 8th on CNBC’s list, have also lagged the S&P but last sold in 2009 as the stock market was recovering from its lows after being hit hard by the 2007-2008 financial crisis.
Valuation Increase
The rise in value of football teams is due in large part to the league’s large and expanding media contracts.
The NFL’s current television contracts are: Comcast, Disney, Paramount and Fox, The deal, which began last season, is worth an average of $9.2 billion per year, an 85% increase over previous deals.
Add a streaming subscription YouTube NFL Sunday Ticket and Amazon Prime The NFL is guaranteed an average of $12.4 billion in media rights revenue per year through 2032, nearly double the $6.48 billion it collected annually in the last media rights cycle.
On top of these big deals, the league is boosting media revenue by selling additional streaming games.
The NFL sold exclusive rights to its wild-card playoffs last season to Comcast’s Peacock streaming service for $110 million, according to a person familiar with the deal.
The league has sold three packages this season that offer exclusive streaming of two games on Christmas Day. Netflix It will broadcast NFL games for $150 million, wild-card games on Amazon Prime for $120 million and international regular-season games on Peacock for $80 million, according to a person familiar with the deal. The NFL is expected to get about $200 million for commercial rights to Sunday Ticket, which will show NFL games in bars and restaurants, according to the people.
Combined, those deals will bring the total media rights fee to $357 million per team, up from $325 million in 2023.
The CNBC sources requested anonymity to discuss details of the deal that haven’t been made public.
A close-up view of a broadcast camera showing the NFL crest and ESPN Monday Night Football logo during the game between the Chicago Bears and Minnesota Vikings at Soldier Field on Dec. 20, 2021 in Chicago.
ICON SPORTSWIRE | ICON SPORTSWIRE | Getty Images
In the NFL, a rising tide floats all boats. The 32 teams split national media contract revenues, revenues from league-wide sponsorship and licensing deals, and 34% of ticket sales equally. In 2023, $13.68 billion of the NFL’s $20.47 billion in revenues, or 67%, was split equally.
Those generous revenue shares, combined with a salary cap that limits player spending to about 49% of revenue, would allow small-market teams like Green Bay, Wisconsin and Buffalo, N.Y., to compete with big-market teams in New York and Los Angeles.The small-market Kansas City Chiefs, ranked 18th in CNBC’s 2024 ratings rankings, have won the last two Super Bowls and three of the last five.
But there’s still a big gap in the value of teams, mainly because of stadiums: Teams don’t share in the revenue from luxury suites, on-site restaurants, merchandise stores, sponsorships or non-NFL events.
Last year, that made a bigger difference than usual.
Taylor Swift performs during The Erasu Tour at SoFi Stadium on August 7, 2023 in Inglewood, California.
Allen J. Schaven | Los Angeles Times | Getty Images
Pop star Taylor Swift performed at several NFL stadiums last year as part of her smash-hit Eras Tour, including SoFi Stadium in Los Angeles, Raymond James Stadium in Tampa Bay, Gillette Stadium in New England and Lincoln Financial Field in Philadelphia. Each Eras Tour show brought in $4 million in revenue for the host stadium, according to a person familiar with the matter who asked not to be identified because the information is confidential.
The Dolphins’ Hard Rock Stadium, which also hosts the Eras Tour, brought in more than $30 million in revenue from college football games, soccer matches, concerts, festivals and tennis matches last year and could double that this year, according to a person familiar with the matter.
Return on Investment
Revenue sharing and salary cap agreements also make the league more profitable.
During the 2023 season, the average revenue for the NFL’s 32 teams was $640 million and the average operating income (earnings before interest, taxes, depreciation and amortization) was $127 million. The typical NFL team has an EBITDA margin of 19%.
The NFL’s economic success means rising sales prices for teams.
On August 24, 2024, Dallas Cowboys guard No. 18 Ryan Flournoy catches a touchdown pass while being guarded by Los Angeles Chargers guard No. 23 Matt Hankins during the first half of a preseason game at AT&T Stadium in Arlington, Texas.
Ron Jenkins | Getty Images Sports | Getty Images
Two years ago, Walmart His successor, Rob Walton, bought the Denver Broncos for $4.65 billion, or 8.8 times the team’s revenue, but it would be hard for a future owner to pay less than 10 times the team’s revenue these days: CNBC’s 2024 rankings put the average value-to-revenue multiple of all 32 teams at 10.2.
Last year, private-equity billionaire Josh Harris bought the Washington Commanders for $6.05 billion, or 11 times sales, and earlier this year a potential owner was considering buying the Tampa Bay Buccaneers for about $6 billion, which would value the team at 9.4 times sales, according to two people familiar with the matter.
As the team changes ownership, it has proven to be a smart investment.
The Dallas Cowboys, the league’s most valuable team, is worth $11 billion, 73 times what owner Jerry Jones paid for the team in 1989. The S&P 500 is up just 18 times since Jones bought the Cowboys.
The Cowboys generated far more revenue than any team in the league last year with $1.22 billion, and the highest operating profit of $550 million, largely due to sponsorship revenues. Dallas is closing in on the NFL lead in sponsorship revenues with $250 million, according to a CNBC source.
Dallas Cowboys owner Jerry Jones attends training camp at River Ridge Complex in Oxnard, California on July 24, 2021.
Jane Kamin Onsair | Getty Images
The Los Angeles Rams, ranked second on CNBC’s 2024 valuation list, also ranked second in revenue with $825 million. The Rams were also second in the league in sponsorship revenue, bringing in significant revenue from hosting more than 25 non-football events at SoFi Stadium, including six sold-out nights of Swift’s Eraser Tour, three nights of Beyoncé’s Renaissance Tour, and concerts with Ed Sheeran, Metallica and Pink.
The Rams, based in St. Louis when sports and entertainment mogul Stanley Kroenke bought them for $750 million in 2010, are now worth $8 billion, and his investment is more than quadrupled when you factor in the $550 million in relocation fees Kroenke had to pay the league to move the team to Los Angeles and the $571 million settlement related to the litigation surrounding the move.
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 all allowed institutional investors to buy limited partner shares in their teams, as have European soccer leagues such as the English Premier League.
The NFL followed suit last week. The league’s owners voted to allow a select group of private equity firms — Ares Management, Sixth Street Partners, Arktos Partners and an investment consortium made up of Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Rudis — to acquire up to 10% of NFL franchises. The companies have committed $12 billion in capital over the long term, people familiar with the matter told CNBC.
Allowing private equity firms to invest in the league would make it easier to raise funds to buy teams.
Even the least valuable team on CNBC’s list, the Cincinnati Bengals, is worth $5.25 billion.
The league’s maximum allowable debt is $1.4 billion, so the capital burden would be $3.8 billion. Assuming the general partners hold a minimum 30% stake, the limited partners would need to put in a total of $2.7 billion to participate in the games.
Disclosure: Peacock is a streaming service from NBCUniversal, CNBC’s parent company.
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Correction: This story has been updated to correct that an owner was interested in buying the Tampa Bay Buccaneers earlier this year for about $6 billion, according to two people familiar with the matter. An earlier story incorrectly identified the interested party.