Inside the Skyrocketing Value of Sports Franchises – The Average Joe

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    Inside the Skyrocketing Value of Sports Franchises

    victorlei

    June 22, 2023

    Last week, Michael Jordan sold a majority stake in the Charlotte Hornets at a $3B valuation — returning nearly 11x on his $275M investment.

    It’s the seventh-largest sports franchise sale in history (six of these have been in the past 13 months). And it shows just how in-demand sports teams are.

    • In the past 40 years, the value of every US team in all four major sports has increased exponentially, per sports writer Dan Moore.
    • The average NBA team was worth 15% more in 2022 than the previous year.

    Team values have been closely correlated to the worth of soaring broadcasting deals from Amazon, Alphabet and Apple entering the sports world — driving up bids.

    Last year, Major League Soccer signed a deal with Apple that’s nearly triple its previous contract. And networks have little option but to compete — with sports being one of the few reasons consumers still subscribe to cable.

    The real value of sports teams?

    Nearly all sports teams are privately owned except a few. Liberty Braves Group (NASDAQ:BATRA) owns the MLB’s Atlanta Braves and its related real estate properties — which, in 2022, were valued 4x more than in 2010. But there’s more to the value of sports team than just cash flow, per Moore:

    • No pro sports team “has ever generated enough revenue to justify its sales price.”
    • Values are driven by the credibility and fame that comes with it — and the entry into the exclusive “rich guy clubs.”

    Just take a look at the acclaimed Manchester United (NYSE:MANU) — which is in the middle of a bidding war between Middle Eastern and British billionaires.

    Next up: Rights to broadcast the NBA is coming due in 2025 — and early estimates suggest the deal could come in 3x over its previous pricetag.

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