Just because the auction of the Buffalo Bills is having a tough time drawing bids above $1 billion two years after the Cleveland Browns sold for $987 million, and just weeks after the National Basketball Association's Los Angeles Clippers were sold for $2 billion, doesn't mean the National Football League is losing its status as the most valuable sports league in the world.
To the contrary: The average NFL team is currently worth $1.43 billion, the highest value in the 17 years Forbes has tracked professional football team finances. The $1.43 billion average is 23% more than a year ago, the biggest year-over-year increase since 1999.
Forbes’ team values are enterprise values (equity plus net debt) and are calculated using multiples of revenue that reflect each team’s current stadium economics (with adjustments for pending new stadiums and renovations). For teams that own their stadiums, we include the revenue the team gets from the stadium (net of applicable debt payments), but not the market value of the real estate.
In our most recent reports on the other leading team sports, the world's 20 most valuable soccer teams (comprised mainly of clubs from the top English, Spanish, German and Italian leagues) had an average value of $1.05 billion, Major League Baseball teams had an average value of $811 million, followed by the NBA, with an average team value of $634 million.
For the eighth consecutive year the Dallas Cowboys, worth $3.2 billion, are the league’s most valuable team. The only sports team worth more is Real Madrid, valued at $3.4 billion, while another Spanish soccer team, Barcelona, is tied with the Cowboys. Despite making only three postseason appearances over past decade, the Cowboys posted the NFL’s highest revenue ($560 million) and operating income ($246 million) in 2013. The Cowboys are a marketing juggernaut that is launching two new deals this season that will align the blue star with global luxury watch and cruise line brands, two categories NFL teams have previously ignored or have been unable to tap. The Cowboys' deals with Hublot and Carnival will pay the team in the low seven figures combined annually over five years.
Rounding out the top four are the New England Patriots, worth $2.6 billion, Washington Redskins, worth $2.4 billion and New York Giants, valued at $2.1 billion. Short explanation: the Cowboys, Patriots, Redskins and Giants were the only NFL teams that were among the league’s top five in both premium seating revenue (at least $55 million) and stadium sponsorship revenue (over $40 million) in 2013. Each of these four teams also saw their value climb by 39% or more during the past year.
Special Report: The Business Of The NFL
There is a widening wealth gap in the NFL due to the piles of cash big market teams generate from modern stadiums and the premium a buyer would be willing to pay for entry into the most elite U.S. sports league in a big city. The value of the New York Jets, Philadelphia Eagles, Chicago Bears, and San Francisco 49ers each rose by at least 30% during the past year.
To be sure, it is a great time to own an NFL team regardless of market or stadium. For the 2013 season, the average NFL team generated record revenue (net of proceeds used to pay off stadium debt) and record operating income (earnings before interest, taxes, depreciation and amortization) of $299 million and $53 million, respectively. Each of the NFL’s 32 teams took in a record $170 million of national revenue, mainly from league-wide broadcasting and licensing fees.
The NFL is by far the most popular sport on television and media right fees underpin the league's sweeping increase in team values. Thanks to new broadcasting deals with NBC, ESPN, CBS and Fox that begin with the 2014 season, evenly-split revenue will increase to $250 million over the next four years. In addition, the league's one-year Thursday Night Football deal with CBS will add $275 million in revenue to the league this season. And the NFL's deal with DirecTV--which recently began to offer streaming options--is expected to increase substantially from its current $1 billion a year fee to the league given the importance of the NFL to the value of the satellite television provider.
The hefty premium paid by Steve Ballmer for the Clippers has definitely gotten the attention of the NFL, with several owners telling me there will likely be an announcement within two years of two NFL teams moving to Los Angeles and sharing a new stadium. Not lost on the league: California is home to the most billionaires (111) and Fortune 500 companies (54) of any state.
The most immediately portable teams are the San Diego Chargers, Jacksonville Jaguars, Oakland Raiders and St. Louis Rams. The Jaguars recently extended their naming rights deal with EverBank, are in the process of a $63 million stadium renovation and would have to pay the city of Jacksonville to break their lease. The current leases for the Chargers, Raiders and Rams permit all three teams to move after this season. My gut tells me it will be the Rams and Raiders because St. Louis is a baseball town and the Raiders were already a big hit in L.A. during the 1980s.
Forbes compiles its valuations primarily based on data and information from sports bankers, who provided insight on team and league financial information, several NFL team executives, who confirm such details as league licensing agreements, public documents, like this Moody's report on the New York Jets debt at MetLife Stadium, and this Fitch report, that contains information on the league's television deals, trade publications like Team Marketing, which provide guidance on ticket and concession prices, and consulting firms like CSL, that publish reports on stadium financing. We also pore over the leases of teams that play in publicly owned stadiums for details about expenses and revenue.
For more on the business of sports check out our three-time Emmy Award winning television show, Forbes SportsMoney, which airs on the YES Network and Fox Sports 1.
