If there was one takeaway from Sportico’s 2022 NFL franchise valuations last week, it was that NFL owners are doing pretty well.
The average NFL franchise value is up 18% over the last year, according to Sportico’s calculations, after rising 14% in the previous year. There are 16 NFL franchises worth at least $4 billion, versus seven total in the other U.S. sports leagues (four in MLB, three in the NBA).
Sportico launched its own version of franchise valuations two years ago to capture the current climate of sports team ownership, where real estate and team-related businesses are increasingly important aspects of the owner’s portfolio. Other publications’ values exclude these assets, but if we want to look more than two years into the past, we need sources that predate Sportico.
Using data from Financial World and Forbes, we can piece together a picture of how sports franchise valuations have changed over the past quarter of a century. The NFL’s dominance is nothing new—the league has had the highest average value in pro sports as far back as we tracked. But what’s surprising is that the NFL used to have even greater separation from the rest of the pack.
In the late 1990s and early 2000s, NFL valuations exploded and, for several years between 2004 and 2009, the average football team was worth more than double the average in baseball or basketball. Those leagues still aren’t close to catching the NFL, which has built a solid $1 billion cushion over the NBA.
Sportico’s podcast hosts have wondered what will be the next change to the order of the four major U.S. sports leagues in the valuations totem pole. There has only been one lasting change over the past 25 years, and that was the NBA pulling ahead of MLB, from which it has further distanced itself in the years since.
Notably, that happened in 2014, the same year the NBA signed a nine-year media-rights extension with ESPN and Turner worth roughly three times more annually than the previous deal. Indeed, television contracts are a huge driver of valuation spikes. The NFL’s largest single-year increase in average franchise value (1998) and the NHL’s two biggest such jumps (1998 and 2013) were all accompanied by a more than doubling of those leagues’ media-rights values.
The NFL’s consistently lucrative media deals have made its teams the most valuable in pro sports every year since Brett Favre won his first MVP award. The league has also seen its teams’ values grow the most over that timespan on a percentage basis.
It should be stated that all sports teams have been good investments over the past quarter century. Even the average NHL team is up 1,112% since 1996, significantly more than the S&P 500 at +534%.
That said, the NBA and NFL take the cake, with the average franchise value in both leagues growing about 20 times during that span. Much of that increase has occurred during the past decade. The line on the index chart for the NBA in particular looks like the hockey stick growth commonly associated with successful tech startups.
To drive home the recent NBA growth, we divided the past 25 years into three roughly equal periods and measured each of the four major sports leagues’ percentage increase in average franchise value during those time spans. In the segment from 2012 to 2021 alone, NBA values increased 387%, while the NFL, MLB and NHL were up 215%, 215% and 207%, respectively, each more or less in line with stock market growth.
That’s a big change from the 1996 to 2004 period, when the 319% growth of NFL franchise values outpaced the other leagues significantly. Those eight years encompassed the dot.com crash, a 31-month period during which the S&P 500 shed nearly half of its value, but the NFL was immune.
The other leagues fared pretty well, too, considering the country’s economic situation. Even the Great Recession of 2008 couldn’t completely tank sports valuations. While the stock market grew just 18% between 2004 and 2012, each league’s average team value went up at least 50%.
If the past 25 years has taught us anything, it’s that nothing is certain except death, taxes and the rise in sports franchise valuations. Whether the NBA will continue its hot streak or if another league will emerge as the leader in the percentage growth metric remains to be seen, but all arrows are pointing up, even with the S&P 500 down 13% since New Year’s Eve.
Buying a sports team in the mid-1990s was one of the smartest financial decisions one could make, but some alternatives proved to be just slightly better investments—the value of Apple stock, for instance, multiplied by more than 700. Even better, a share of Monster Beverage Corp worth $0.02 on Dec. 31, 1996, opened at $88.78 this past Monday.
But Jeffrey Lurie’s $185 million purchase of the Philadelphia Eagles in 1994 turned out OK, too. The team is now worth $4.7 billion. In the second part of this series tomorrow, we’ll look at how some other individual teams’ values have changed over time.