NFL Teams: Valuable Assets, But Owners Are Sitting Tight
The Seattle Seahawks are the next team likely to be sold in the National Football League, but the overall pace of team turnover is slowing, as owners recognize the massive potential for future growth in league value. The NFL’s recent media rights deal, expansion efforts, and growing international popularity are expected to drive valuations even higher, giving owners a strong incentive to hold onto their franchises.
Key Takeaways:
- NFL valuations are on the rise: The average NFL team is now worth $6.49 billion, with none valued at less than $5.25 billion.
- Media rights deals and expansion fuel growth: The NFL’s new media rights deal, worth over $110 billion, is boosting revenue and valuations. Plans for an 18th regular season game and international expansion in Spain, Germany, and Brazil are also expected to contribute to future growth.
- Franchise sales are infrequent: The NFL sees a sale roughly every 3½ years, typically due to death or scandal.
- Private equity investment enters the scene: NFL owners recently voted to allow select private equity firms to buy up to a 10% stake in individual teams. This move aims to increase liquidity in the market and provide owners with additional capital.
- Limited ownership and control: The NFL is cautious about private equity involvement, limiting ownership to 10% with restrictions on governance rights.
NFL Valuations Soaring: Why Owners Are Sitting Tight
The NFL is a lucrative business, and its value continues to climb. The recent $110 billion media rights deal, signed in 2021 and running through 2033, is a significant driver of this growth. This deal represents an 80% increase from the previous agreement, and the league even has an option to opt out of all packages except Disney’s at the end of the 2028-2029 season. This flexibility gives the NFL the opportunity to capitalize on future bidding wars, potentially further driving up valuations.
The NFL’s international expansion strategy is another factor contributing to the optimistic outlook. The league is exploring adding games in Spain, Germany, and Brazil, which could significantly expand its reach and generate new revenue streams. This expansion, coupled with the anticipated addition of an 18th regular season game, is expected to increase league revenue and further boost team valuations.
"The NFL has barely scratched the surface on international revenues," said Marc Ganis, a sports consultant who advises NFL Commissioner Roger Goodell and league owners.
An Illiquid Market: Limited Franchise Sales
While NFL franchises are incredibly valuable, the market for selling them is surprisingly illiquid. Team sales are infrequent, occurring roughly every 3½ years, and are typically driven by events like death or scandal.
The last franchise sale was the Washington Commanders, which changed hands in 2023 for a record $6 billion after Daniel Snyder was pressured to relinquish ownership amid accusations of a toxic workplace and sexual harassment.
The NFL prefers stability and long-term decision-making, which is often associated with owners who remain in control for decades. Modernized estate planning measures are also contributing to more family handoffs, further decreasing the number of full-franchise sales.
"The league’s decision-makers have enormous skin in the game," said Marc Ganis. "They’re not paid employees with voting rights. They’re making choices thinking generationally."
Private Equity Steps In: Injecting Liquidity and Capital
In an attempt to increase liquidity in the market, the NFL recently opened the door to private equity investment. Last week, NFL owners voted to allow select private equity firms to buy up to a 10% stake in individual teams, with each firm or consortium able to invest in up to six teams.
The Miami Dolphins, Buffalo Bills, and Los Angeles Chargers are expected to be among the first teams exploring minority stakes. The Bills are considering selling up to 25% of the team in total.
This move is a significant departure for the NFL, which has historically been averse to private equity ownership. The NBA, NHL, and Major League Baseball already allow up to 30% ownership by private equity firms, indicating that the NFL is finally embracing this model.
“The NFL has clearly put liquidity at the forefront," said Tracy Gallagher, head of private investments at Arta Finance. "This is the first of many steps toward adding more buyer options.”
The league is taking a cautious approach, limiting private equity ownership to 10% and requiring firms to accept carry sharing, where the league takes a percentage of the profits earned by the fund managers. This cautious strategy is aimed at preserving the NFL’s unique culture of individual ownership while introducing a new source of capital into the league.
Robert Kraft, owner of the New England Patriots, highlighted the NFL’s commitment to ensuring that teams remain central to their communities.
"Limiting the investment to 10% is a way to keep it under control, from our point of view," he said, emphasizing the league’s desire to prioritize community engagement over maximizing monetary gains.
Future Outlook: Valuations Expected to Continue Rising
With a strong media rights deal, an ambitious international strategy, and the new influx of private equity capital, the NFL is poised for continued growth. Valuations are expected to remain robust, although the exact pace of future increases is difficult to predict.
While the NFL remains resistant to a complete shift to private equity ownership, the recent decision to allow limited investment signifies a willingness to adapt and evolve. The league’s commitment to maintaining its core values while embracing new opportunities suggests that the future for the NFL, and its incredibly valuable franchises, is bright.
