A National Football League team is now 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 are a lucrative asset for the owners of the most popular U.S. sports league: The returns they have earned on their initial investments dwarf the gains of traditional stocks over equivalent 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 the value of a deal over time. The Texans are now worth $6.35 billion, more than ten times McNair's transfer fee and three times the profits of the S&P500 since this year.
That's not bad for a team that has a record of 152-202-1 in its 22 seasons and has never made it to the Super Bowl.
And Texans are not alone.
Of the last 10 NFL teams sold, seven 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 list of team valuations for 2024 — have lagged overall market gains and, notably, were sold within the last two years. The Miami Dolphins, No. 8 on CNBC's list, also lag the S&P but were last sold in 2009, when the stock market was coming back from a low point following the slumps during the 2007-08 financial crisis.
Rising ratings
The increase in the value of football teams is largely the result of the league's massive and growing media contracts.
The NFL’s current television contracts with Comcast, Disneys, Outstanding And Fox, The contracts that began last season are worth an average of $9.2 billion per year, 85 percent more than previous deals.
Add the streaming offers with YouTube for NFL Sunday Ticket and with Amazon Prime For Thursday Night Football, the NFL is guaranteed an average of $12.4 billion per year through 2032 – nearly double the $6.48 billion it earned annually during its previous media rights cycle.
More coverage of the official 2024 NFL team ratings
In addition to these bulk deals, the league increased 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, according to a person familiar with the deal.
The league sold three exclusive streaming packages for this season: two games on Christmas Day on Netflix for a total of $150 million; a Wild Card game on Amazon Prime for $120 million; and an international regular-season game on Peacock for $80 million, according to the person familiar with the deals. The league is expected to receive about $200 million for its Sunday Ticket commercial rights, which bring a number of NFL games to bars and restaurants, according to the person familiar with the matter.
Combined, total media rights fees amount to $357 million per team (up from $325 million in 2023).
CNBC sources requested anonymity to discuss details of the deals, which are not publicly available.
A closeup view of a broadcast camera with the NFL crest and ESPN Monday Night Football logo is shown 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 split revenue from national media contracts 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 split evenly.
When such high 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 teams in large markets like New York and Los Angeles. The small-market Kansas City Chiefs, No. 18 in CNBC's 2024 ratings rankings, have won the last two Super Bowls and three of the last five.
But there is still a big difference between the teams' values, largely due to the stadiums. Teams do not receive a share of the revenue generated from luxury suites, on-site restaurants, merchandise stores, sponsorships or non-NFL events at their stadiums.
Last year it made a bigger difference than usual.
Taylor Swift performs during her 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 as part of her successful Eras Tour last year, including SoFi Stadium in Los Angeles, Raymond James Stadium in Tampa Bay, Gillette Stadium in New England and Lincoln Financial Field in Philadelphia. An Eras Tour stop generated $4 million in revenue per show for the host stadium, according to a person familiar with the matter who spoke on the condition of anonymity to discuss confidential information.
The Dolphins' Hard Rock Stadium, which is also a stop on the Eras Tour, brought in more than $30 million last year from college football games, soccer matches, concerts, festivals and tennis matches – and that amount could double this year, according to a person familiar with the matter.
Return on investment
In addition, the revenue sharing and salary cap agreements make the league very profitable.
During the 2023 season, the 32 NFL teams generated average revenue of $640 million and average operating income (earnings before interest, taxes, depreciation, and amortization) of $127 million. The typical NFL team has an EBITDA margin of 19%.
The NFL's financial success led to higher bonuses for team sales.
Ryan Flournoy, No. 18, of the Dallas Cowboys, catches a touchdown pass as Matt Hankins, No. 23, of the Los Angeles Chargers, defends during the first half of a preseason game at AT&T Stadium in Arlington, Texas, August 24, 2024.
Ron Jenkins | Getty Images Sports | 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 potential owner is unlikely to pay less than 10 times revenue for a team. The average value-to-revenue ratio in CNBC's ranking of all 32 teams for 2024 is 10.2.
Last year, private equity billionaire Josh Harris bought the Washington Commanders for $6.05 billion, or 11 times revenue. Earlier this year, a potential 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 prove to be a smart investment.
The league's most valuable team, the Dallas Cowboys, are worth $11 billion – 73 times what owner Jerry Jones paid for the team in 1989. The S&P 500 has risen just 18 times since Jones bought the Cowboys.
The Cowboys had by far the highest revenue of any team in the league last year at $1.22 billion and the highest operating income at $550 million, largely due to sponsorship revenue. Dallas is approaching an NFL high of $250 million in sponsorship revenue, according to CNBC sources.
Owner Jerry Jones of the Dallas Cowboys attends training camp at the River Ridge Complex in Oxnard, California on July 24, 2021.
Jayne Kamin-oncea |
The Los Angeles Rams, ranked No. 2 on CNBC's 2024 valuation list, were also No. 2 in revenue with $825 million. The Rams were also No. 2 in sponsorship revenue in the league and made a tidy sum by 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 by Ed Sheeran, Metallica and Pink.
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 when 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 the legal challenges of the move, his investment is more than four times as much.
The rise in the value of NFL teams explains why private equity firms can't wait 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 partnership interests in teams. European soccer leagues such as the English Premier League have done so as well.
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 investor consortium including Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis – to buy up to 10% of shares in NFL franchises. The firms have committed $12 billion in capital over time, people familiar with the matter told CNBC.
Allowing private equity firms to invest in the league is intended to make it easier to finance the purchase of a team.
Even the lowest-valued team on CNBC's list, the Cincinnati Bengals, are 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 holds the required 30%, limited partners must contribute a total of $2.7 billion to get in the game.
Disclosure: Peacock is the streaming service of NBCUniversal, the parent company of CNBC.
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Correction: This story has been updated to correct that a potential owner considered buying the Tampa Bay Buccaneers for about $6 billion earlier this year, according to two people familiar with the matter. An earlier version missidentified the interested party.
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