The United States economy has been locked in the worst recession since the 1930’s for a number of years, with unemployment and underemployment rampant. The business of sports is a shining exception as the new Forbes Magazine National Football League franchise valuations illustrate. In 1976, the second year I represented athletes, Tampa Bay and Seattle came into the NFL as expansion teams with a purchase price of $16.5 million. The League expanded again in 1995 and Carolina and Jacksonville were priced at $130 million. Five years later Houston was admitted to the League at a cost of $650 million. Fourteen years later, the valuations have entered the stratosphere.
In 1989 Jerry Jones purchased the Dallas Cowboys for $140 million. Today they are valued at $3.2 billion, making them the second most valuable sports franchise in the world, just behind soccer’s Real Madrid, valued at $3.4 billion. The Cowboys have an incredible $245 million of operating income from revenues of $560 million. They have just signed new sponsorship deals with Hublot, a luxury watch company, and Carnival Cruise Lines. In 1994 Robert Kraft paid a record breaking $175 million for New England Patriots. They are now worth $2.6 billion, with revenue of $428 million and operating income of $147 million. In 1999, Dan Snyder purchased the Washington Redskins and their stadium for a record breaking $800 million – the most expensive transaction in history. The Redskins are now valued at $2.4 billion. These franchises are followed by the New York Giants at $2.1 billion, the Houston Texans at $1.85 billion, the New York Jets at $1.8 billion, and the Philadelphia Eagles at $1.75 billion.
What is behind this explosion in franchise values? National television is the major factor. The League has new broadcasting deals with NBC, ESPN, CBS and Fox beginning this year. These deals often include “loss leader economics” with premiums involved so that the network can show promotions to build Monday-Friday viewership. Sports are one of the few televised programs that people insist on watching live. This nation is in the midst of a love affair with the NFL. The long off-season builds up a yearning for the season. This year begins a one-year Thursday night deal with CBS.
Aggressive licensing and marketing by the League and individual teams have yielded a financial bonanza. Individual teams with creative owners like Jerry Jones, Robert Kraft, and Dan Snyder jumped out front early and their revenue reflects it. Stadia with luxury boxes, premium seating, signage, naming rights, also add to the mix. Clever use of the internet and social media, with every platform of content supply being monetized, generates revenue also.
There is no end in sight for the prosperity of individual franchises and the NFL. Are you ready for some football?!