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A Complete Breakdown Of NFL Team Valuations

How certain NFL teams have maximized local revenue to increase their overall team valuation.

August 26, 2020

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Friends,

Yesterday Sportico released an in-depth valuation study of every NFL franchise, which gives details surrounding team revenue, real estate valuations, and corporate partners.

I’ve included a link to the article below, but i’m going to summarize and expand on the most important parts for todays email.

(Image Source: LA Times)

The NFL makes a lot of money, that shouldn’t be a surprise. Maybe more surprising is that the NFL is commonly grouped in with the MLB, NBA, and NHL - even though their $15 billion in annual revenue is over 50% greater than anyone else’s.

Despite virtually no international appeal, the NFL is truly in a class of its own.

From a revenue perspective, here’s a simple breakdown of how the money flows from league offices to individual teams & players:

  • National revenue distribution percentages are agreed upon in the CBA

  • Teams currently get roughly 52% of national revenue

  • Players currently get roughly 48% of national revenue

  • National revenue consists of TV contracts, NFL licensing, NFL merchandise, etc.

  • Teams also make local revenue, which varies from team to team.

  • Local revenue consists of ticket sales, parking, concessions, luxury suites, etc.

Last year, each team was distributed $296M from the league office - which means the NFL made nearly $9.5 billion in national revenue alone.

Given local revenue is specific to each team, we saw a much greater variation. The Dallas Cowboys led the league with $575M, and the Cincinnati Bengals came in last with only $108M. So while both teams brought in just shy of $300M from the league, the Cowboys produced over half a billion dollars more from local markets.

Individual Team Valuations

From a valuation perspective, here is where each team currently ranks (Source):

1. Dallas Cowboys – $6.43 billion

2. New England Patriots – $4.97 billion

3. Los Angeles Rams – $4.10 billion

4. New York Giants – $4.00 billion

5. New York Jets – $3.70 billion

6. San Francisco 49ers – $3.63 billion

7. Washington Football Team – $3.58 billion

8. Chicago Bears – $3.41 billion

9. Philadelphia Eagles – $3.35 billion

10. Houston Texans – $3.34 billion

11. Miami Dolphins – $3.30 billion

12. Green Bay Packers – $3.16 billion

13. Pittsburgh Steelers – $3.11 billion

14. Denver Broncos – $3.10 billion

15. Seattle Seahawks – $3.08 billion

16. Atlanta Falcons – $3.00 billion

17. Minnesota Vikings – $2.84 billion

18. Kansas City Chiefs – $2.83 billion

19. Oakland Raiders – $2.82 billion

20. Baltimore Ravens – $2.80 billion

21. Carolina Panthers – $2.75 billion

22. Los Angeles Chargers – $2.67 billion

23. New Orleans Saints – $2.59 billion

24. Indianapolis Colts – $2.50 billion

25. Jacksonville Jaguars – $2.39 billion

26. Cleveland Browns – $2.36 billion

27. Tampa Bay Buccaneers – $2.30 billion

28. Tennessee Titans – $2.23 billion

29. Arizona Cardinals – $2.22 billion

30. Buffalo Bills – $2.15 billion

31. Detroit Lions – $2.14 billion

32. Cincinnati Bengals – $2.12 billion

With valuations ranging from $2.12 billion to $6.43 billion, the league average came in at just over $3 billion.

With all teams given the same national revenue, there was historically a much tighter spread on the range of team valuations. But as certain teams continue to maximize local revenue, we’re starting to see a much larger disparity between individual team valuations.

* Fun Fact - Based on Sportico’s team valuations, you could buy the Bengals, Lions, and Bills and still potentially not be able to afford the Dallas Cowboys.

Cowboys Domination

Off the field, Jerry Jones and the Dallas Cowboys continue to dominate.

This paragraph below does a great job detailing the impact of a team’s local revenue (Source):

In 2019, the Cowboys generated an estimated $871 million in revenue, which was 81% greater than the average of the other 31 teams. In other words, even had the team not sold a single hot dog, t-shirt, parking pass or sponsorship, the $300 million the team generated from ticket sales, premium seating and deferred revenue from personal seat licenses alone would still have been greater than the locally-derived revenue of 30 of the NFL’s teams. (The exception: the New England Patriots, which generated $315 million from its stadium, local sponsorships, and net revenue from road games last year.

I guess the saying is true, everything’s bigger in Texas.

Welcome To Los Angeles

Despite ranking 26th in league-wide revenue, the Los Angeles Rams were valued at $4.1 billion - which was good enough for 3rd in the league.

Why the disparity?

“Team-related real estate in Inglewood, Calif. and a revenue uptick projected from the stadium’s opening next month are among the reasons why the Rams’ total value is third in the league at $4.1 billion.”

LA’s new development in Inglewood, including SoFi stadium, covers 298 acres. The property will be home to the LA Rams and Chargers, but also host other sporting events like the College Football Playoff and Opening/Closing Olympic Ceremonies in 2028.

A Risk Free Investment?

Due to a combination of tax structure and reliable league revenue, certain NFL owners believe that their team is a risk free investment.

One NFL team owner even went as far to say his investment “is so secure it ought to be judged against the yields of treasury notes” and “that owning an NFL team beats today’s low-yield curves every time.”

Here is an excerpt from the article (Source):

A provision in the tax code that allows for the amortization of goodwill and intangibles enables professional sports team owners to write off the entire purchase price of a team over 15 years, according to a longtime NFL owner (whose group did it over an even shorter period under old IRS rules). This accounting benefit, akin to depreciation, is permitted even though the value of sports franchises have in actuality appreciated for years—the growth of team sale prices has outpaced virtually every other industry or index over at least the last decade.

Add these savings to the reliable cash flows in the NFL, and potential investors see the league as something of a safe haven for their money. National media, sponsorships and net royalties from the league’s licensing and film division, which totaled nearly $9.5 billion in 2019—combined with predictable expenses because of the league’s salary cap—guaranteed an operating profit for every team last season. “NFL teams are virtually running on risk-free auto-pilot,” the late John Vrooman, a longtime Vanderbilt economist, told Sportico in June.

Whether owning an NFL franchise is risk free or not, it’s been a great investment over the last decade. Team valuations are up over 180% since 2010. Furthermore, these numbers will continue to climb as the league starts to renew TV contracts in the coming years.

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Extra Credit

Today’s extra credit takes you on a tour of the Dallas Cowboy World Headquarters, or better known as “The Star”.

Located in Frisco, TX - The Star is a 91-acre facility that houses team offices, practice fields, weight rooms, museums and more.

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