The Most Valuable Sports Franchises In The World

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Friends,

Forbes has released its annual list of the world’s most valuable soccer teams, with the average club increasing 30% in value as investors continue to search for investment opportunities within professional sports globally.

Here are the Top 10:

1. Barcelona: $4.76 billion (+18% two-year change)

2. Real Madrid: $4.75 billion (+12% two-year change)

3. Bayern Munich: $4.21 billion (+39% two-year change)

4. Manchester United: $4.2 billion (+10% two-year change)

5. Liverpool: $4.1 billion (+88% two-year change)

6. Manchester City: $4 billion (+49% two-year change)

7. Chelsea: $3.2 billion (+24% two-year change)

8. Arsenal: $2.8 billion (+23% two-year change)

9. Paris Saint-Germain: $2.5 billion (+129% two-year change)

10. Tottenham Hotspur: $2.3 billion (+42% two-year change)

Let’s run through a couple of things that caught my attention.

Financially, Barcelona went through one of the toughest stretches in the club’s 121-year history last year. They lost over $115 million in total, their debt doubled to about $600 million, and players accepted 70% wage cuts.

Not to mention that the highest-paid player in the world, Lionel Messi, publicly threatened to leave the club and team president Josep Maria Bartomeu resigned following a petition of nearly 20,000 fans demanding that he step down.

Simply put, it was a tough year for Barcelona.

The interesting part?

They have officially become the most valuable soccer team globally, passing Real Madrid for the first time.

How is that possible?

Well, they have some obvious things to figure out around roster management, reducing debt, long-term leadership, and more, but ultimately, it all comes down to the “rich” multiple investors are willing to place on top-tier international soccer clubs.

Here are a few examples that Mike Ozanian at Forbes pointed out in the article:

• RedBird Capital acquired a minority stake in Fenway Sports Group earlier this year, valuing Liverpool at more than $4 billion — roughly 6.4x revenue.

• Steve Cohen purchased the New York Mets last year for $2.42 billion, representing a similar ~6.4x revenue multiple.

• Ryan Smith purchased the NBA’s Utah Jazz last year for $1.66 billion, representing a 6x pre-pandemic revenue multiple.

My point?

Similar to major US professional sports leagues like the NFL, NBA, MLB, and NHL, institutional investors and high net worth individuals continue to value top-tier professional sports teams at a premium, regardless of whether they are located domestically or abroad.

With teams like Barcelona and Real Madrid receiving similar valuations based on a 6x revenue multiple, that trend doens’t appear to be changing anytime soon.

Perhaps even more interesting?

I aggregated valuation data from Forbes and Sportico to determine the top ten most valuable franchises globally, regardless of the league they play in.

1. New York Yankees (MLB): $6.75 billion

2. Dallas Cowboys (NFL): $6.43 billion

3. New York Knicks (NBA): $5.42 billion

4. Golden State Warriors (NBA): $5.21 billion

5. Los Angeles Lakers (NBA): $5.14 billion

6. New England Patriots (NFL): $4.97 billion

7. Boston Red Sox (MLB): $4.8 billion

8. Barcelona (Soccer): $4.76 billion

9. Real Madrid (Soccer): $4.75 billion

10. Los Angeles Dodgers (MLB): $4.62 billion

I don’t know about you, but it surprised me that teams like the New England Patriots and Boston Red Sox are currently considered more valuable than Barcelona and Real Madrid.

Nothing against Boston, of course, but Barcelona and Real Madrid are two of the most recognizable sports brands in the world — each having more than 260 million followers on social media.

Other factors like league-wide media rights and ticket/merchandise sales obviously play an important role. Still, it’s wild to see how much professional sports teams & leagues continue to increase in value.

My guess?

As the individual leagues & teams get more creative with the continued emergence of streaming, sports betting, and more, this is only the beginning.

Have a great day, and we’ll talk tomorrow.

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