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. Professional football teams have been a lucrative asset for owners in the most popular U.S. sports league: The returns they’ve seen on their initial investments dwarf the earnings of traditional stocks over similar periods.
Take, for example, the Houston Texans, No. 11 in CNBC’s 2024 value rankings. In 1999, the last time the NFL expanded, the late Robert McNair agreed to buy the rights to the franchise for a purchase price of $600 million, which takes into account the payment structure and value of a deal over time. The Texans are now worth $6.35 billion, more than 10 times McNair’s salary and three times his earnings S&P 500 since that year.
That’s not bad for a team that has a 152-202-1 record in its 22 seasons and has never reached the Super Bowl.
And Texans aren’t alone.
In the past 10 NFL teams to be sold, seven of the 10 have outperformed the S&P 500 on a percentage basis in the period since the sale. The Washington Commanders and Denver Broncos — No. 13 and No. 14 on CNBC’s 2024 team valuation list, respectively — are suffering from broader market gains and, notably, have been sold over the past two years. The Miami Dolphins, No. 8 on CNBC’s list, also lag the S&P, but were last sold off in 2009 when the stock market was bottoming out after a slump during the 2007-08 financial crisis.
Rising valuations
The escalation of the values of football teams is largely a result of the league massive and growing media deals.
The NFL’s current TV deals with Comcast, Disney, Sovereign and Fox, that began last season, are worth an average of $9.2 billion annually, 85% more than previous deals.
Add streaming offers with YouTube for NFL Sunday Ticket and with Amazon Prime for Thursday Night Football, and the NFL is guaranteed an average of $12.4 billion annually through 2032 — nearly double the $6.48 billion annually it collected during the previous media rights cycle.
In addition to these massive deals, the league bolstered 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 streaming service Peacock for $110 million, according to a person familiar with the deal.
The league sold three exclusive streaming packages for this season: two games on Christmas Day; Netflix for a total of $150 million. a Wild Card game on Amazon Prime for $120 million. and an international regular-season game at the Peacock for $80 million, according to the person with knowledge of the deals. The league should receive about $200 million for the commercial rights to the Sunday Ticket, which carries a number of NFL games to bars and restaurants, according to the person familiar with the matter.
All of these deals combined bring total media rights fees to $357 million per team, up from $325 million in 2023.
CNBC’s sources spoke on condition of anonymity to discuss the details of the deals, which are not publicly available.
A detail view of a broadcast camera is shown with the NFL crest and the ESPN Monday Night Football logo during a game between the Chicago Bears and the Minnesota Vikings at Soldier Field in Chicago on December 20, 2021.
Icon Sportswire | Icon Sportswire | Getty Images
A rising tide lifts all boats in the NFL. The 32 teams share national media revenue equally, along with money from league-wide sponsorship and licensing deals and 34% of gate receipts. In 2023, $13.68 billion, or 67%, of the NFL’s $20.47 billion in revenue was shared equally.
When that much revenue sharing is combined with a salary cap that limits player spending to about 49% of revenue, teams in small markets like Green Bay. Wisconsin? and Buffalo, New York can compete with big-market teams in New York and Los Angeles. The small-market Kansas City Chiefs, No. 18 in CNBC’s 2024 valuation rankings, have won the last two Super Bowls and three of the last five.
But there’s still a big gap in team values, mostly because of pitches. Teams do not share revenue from luxury suites, on-site restaurants, merchandise, sponsorships or non-NFL events at their stadiums.
Last year, that made more of a difference than usual.
Taylor Swift performs during The Eras Tour at SoFi Stadium in Inglewood, California on August 7, 2023.
Allen J. Schaben | Los Angeles Times | Getty Images
Pop star Taylor Swift performed at several NFL stadiums last year as part of her big Eras tour, including Los Angeles’ SoFi Stadium, Tampa Bay’s Raymond James Stadium, New England’s Gillette Stadium and Philadelphia’s Lincoln Financial Field. One Eras Tour stop brought in $4 million per show for the stadium it hosted, according to a person familiar with the matter, who spoke on condition of anonymity to discuss confidential information.
The Dolphins’ Hard Rock Stadium, also a stop on the Eras Tour, took in more than $30 million last year from college football games, football games, concerts, festivals and tennis matches — and could double that this year, according to a person familiar with the matter. .
Return on investment
Revenue sharing and salary cap deals 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 — earnings before taxes, interest, depreciation and amortization — of $127 million. The typical NFL team has an EBITDA margin of 19%.
Financial success for the NFL meant higher premiums for team sales.
Ryan Flournoy, #18 of the Dallas Cowboys, catches a touchdown pass as Matt Hankins, #23 of the Los Angeles Chargers, defends during the first half of a preseason game at AT&T Stadium in Arlington, Texas on August 24, 2024.
Ron Jenkins | Getty Images Sport | Getty Images
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 the 2024 CNBC rankings of all 32 teams is 10.2.
Last year, private equity billionaire Josh Harris bought the Washington Governors for $6.05 billion, or 11 times revenue. Earlier this year, a prospective owner considered buying the Tampa Bay Buccaneers for about $6 billion, which would have valued the team at 9.4 times revenue, according to two people familiar with the matter.
When teams change hands, they have proven to be a smart investment.
The league’s most valuable team, the Dallas Cowboys, 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 had 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, largely due to sponsorship revenue. According to CNBC sources, Dallas is approaching the NFL’s $250 million in sponsorship revenue.
Dallas Cowboys owner Jerry Jones attends training camp at the River Ridge Complex in Oxnard, California on July 24, 2021.
Jayne Kamin- oncea | Getty Images
The Los Angeles Rams, No. 2 on CNBC’s 2024 valuation list, were also No. 2 in revenue, with $825 million. The Rams were also second in the league in sponsorship revenue and brought in some serious money hosting more than 25 non-football events at SoFi Stadium, including six sold-out nights of Swift’s Eras Tour and three of Beyoncé’s Renaissance Tour, as well as concerts for Ed Sheeran, Metallica and Pink.
The Rams, based 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 to the relocation, his investment more than quadrupled .
The rise in NFL team values explains why private equity firms are scrambling to invest in the league.
For several years, Major League Baseball, the National Basketball Association, the National Hockey League and Major League Soccer have allowed institutional investors to purchase limited partner interests in teams. European football leagues such as the English Premier League also have.
The NFL followed suit just last week. The league’s owners voted to allow a select group of private equity firms — Ares Management, Sixth Street Partners, Arctos Partners and an investment consortium consisting of Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis — to receive up to and 10% stakes in NFL franchises. The companies have allocated $12 billion in capital over time, people familiar with the matter told CNBC.
Allowing private equity firms to invest in the league would 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 will own the minimum required 30%, the limited partners must put up a total of $2.7 billion to get into the game.
Disclosure: Peacock is the streaming service of NBCUniversal, the parent company of CNBC.
Join us on September 10th in Los Angeles for the CNBC x Boardroom Game Show. This high-powered event brings together industry leaders, visionaries and influencers, along with executives and investors to explore the dynamic intersection of business, sports, music and entertainment. For more information and to request an invitation, click here.
Correction: This story has been updated to correct that a prospective owner considered buying the Tampa Bay Buccaneers earlier this year for about $6 billion, according to two people familiar with the matter. An earlier version incorrectly identifies the interested party.
