NFL Teams Are Worth More Than Ever: Billions in Revenue And Rising Valuations
A National Football League team today is a $6.5 billion business. That’s the average value of the NFL’s 32 franchises, according to CNBC’s Official 2024 NFL Team Valuations. Pro football teams have been a lucrative asset for owners in the most popular U.S. sports league: The returns they have seen on their initial investments dwarf the gains of traditional stocks over matching time periods.
Key Takeaways
- NFL teams are a lucrative investment. The average NFL team is worth $6.5 billion, and the most valuable team, the Dallas Cowboys, is worth $11 billion.
- Media deals are driving the rise in team values. The NFL’s massive television and streaming deals are generating billions of dollars in revenue for the league.
- Revenue sharing and the salary cap create a level playing field. Despite a wide chasm in team values, the league’s revenue sharing and salary cap agreements ensure that even small-market teams can compete with big-market teams.
- Private equity is pouring money into the NFL. The league’s recent decision to allow private equity firms to take up to 10% stakes in franchises is expected to further drive the growth of team values.
Rising Valuations
The escalation in football team values is largely the result of the league’s massive and growing media deals.
The NFL’s current television agreements with Comcast, Disney, Paramount and Fox, which began last season, are worth an average of $9.2 billion a year, 85% more than the previous deals. Adding in streaming deals with YouTube for NFL Sunday Ticket and with Amazon Prime for Thursday Night Football, the NFL is guaranteed an average of $12.4 billion a year through 2032 — almost double the $6.48 billion a year it collected during its previous media rights cycle.
On top of those bulk agreements, the league has been boosting its media revenue by selling additional streaming games. Last season, the NFL sold exclusive streaming rights to a Wild Card playoff game to Comcast’s Peacock streaming service for $110 million. This season, the league has sold three exclusive streaming packages:
- Two Christmas Day games on Netflix for a total of $150 million
- A Wild Card game on Amazon Prime for $120 million
- An international regular-season game on Peacock for $80 million
The league should get about $200 million for its commercial Sunday Ticket rights, which gets an array of NFL games into bars and restaurants. All of those agreements combined bring total media rights fees to $357 million per team, up from $325 million in 2023.
Return on Investment
The revenue sharing and salary-cap agreements also make the league very profitable. During the 2023 season, the NFL’s 32 teams generated average revenue of $640 million and average operating income (EBITDA) of $127 million. The typical NFL team has an EBITDA margin of 19%.
Financial success for the NFL has meant higher premiums for team sales. Two years ago, Walmart heir Rob Walton bought the Denver Broncos for $4.65 billion, or 8.8-times the team’s revenue. But these days, a prospective owner would be hard-pressed to pay less than 10-times revenue for a team. The average value-to-revenue multiple in CNBC’s 2024 ranking of all 32 teams is 10.2.
Last year, private equity billionaire Josh Harris purchased the Washington Commanders for $6.05 billion, or 11-times revenue. Earlier this year, hedge fund manager Ken Griffin made an unsolicited $6.05 billion offer for the Tampa Bay Buccaneers, which valued the team at 9.8-times revenue. That offer was turned down by the Glazer family, which owns the franchise. Griffin also earlier this year offered $7.5 billion for the Miami Dolphins, or 11-times revenue.
When teams do change hands, they have proven to be a smart investment. The Dallas Cowboys are worth $11 billion, 73 times what owner Jerry Jones paid for the team in 1989. The S&P 500 is up just 18-fold since Jones bought the Cowboys.
The Cowboys posted by far the most revenue of any team in the league last year, at $1.22 billion, and the most operating income, at $550 million, in large part because of sponsorship revenue. Dallas is approaching an NFL-leading $250 million in revenue from sponsors.
The Los Angeles Rams, No. 2 on CNBC’s 2024 valuations list, were also No. 2 in revenue, with $825 million. The Rams were also second in the league in sponsorship revenue and brought in serious money by hosting more than 25 nonfootball events at SoFi Stadium, including sold-out nights of Taylor Swift’s Eras Tour and Beyoncé’s Renaissance Tour.
The Rams, who were in St. Louis when sports and entertainment mogul Stanley Kroenke bought the team for $750 million in 2010, are now worth $8 billion. Even factoring in the $550 million relocation fee Kroenke had to pay the league to move the team to Los Angeles, as well as a $571 million settlement fee related to legal challenges for relocating, his investment is up more than four-fold.
Private Equity’s Move into the NFL
The rise in NFL team values explains why private equity firms are chomping at the bit 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 permitted institutional investors to buy limited partner stakes in teams. European soccer leagues such as the English Premier League have also.
The NFL followed suit just last week. The league owners voted to allow a select group of private equity firms — Ares Management, Sixth Street Partners, Arctos Partners and an investing consortium made up of Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis — to take up to 10% stakes in NFL franchises. The firms committed $12 billion in capital over time.
Allowing private equity firms to invest in the league should make it easier to finance the purchase of a team. Even the lowest-valued team on CNBC’s list, the Cincinnati Bengals, is worth $5.25 billion.
Factoring in the league’s maximum allowable debt of $1.4 billion, that leaves an equity burden of $3.8 billion. Assuming a general partner would hold the minimum required 30%, limited partners need to put in a combined $2.7 billion to get in the game.