
Since the release of Sportico’s 2020 NFL franchise valuations report earlier this week, readers have submitted questions to Sportico’s senior sports valuations and legal reporter Peter J. Schwartz, who compiled the report and is here to answer them:
Reader: The New York Giants ($4.0 billion) and New York Jets ($3.7 billion) are partners in their stadium and play in the same market. What makes the Giants worth $300 million more?
Sportico: Great question—and one of the more interesting examples of the direct correlation between revenue and value for sports franchises.
Last season, the Giants were third in the league with an estimated $296 million generated locally; that is, revenue produced by the team and not distributed by the NFL. The Jets generated $253 million locally, ranking seventh. That difference, predominantly due to the Giants having more robust sponsorship deals, is the underlying reason for the spread in value between the teams.
It is true that the revenue derived from the management of MetLife Stadium—a joint-venture between the teams—as well as the effects of the greater New York market, impact the two teams’ valuations equally.
Reader: What does the Jacksonville Jaguars’ London strategy do for their valuation?
Sportico: The short answer is that it helps.
The longer answer is that by playing a game a year in London (with even more planned for 2020 prior to the pandemic) the Jaguars have elevated their profile. At the same time, the team increased revenues more than they would have had they hosted comparable games in Jacksonville. However, the difference is relatively marginal when considering that 65% of the team’s revenues come from the league’s media, sponsorship and licensing deals, and that most of the remaining 35% is unaffected by playing abroad.
A more significant boost to the Jaguars’ value (currently $2.39 billion) will be approval of its real estate joint venture (through subsidiary Gecko Investments LLC) next to TIAA Bank Field. If the project moves forward, expect the Jaguars’ valuation to increase over the next few years more than most other teams.
Reader: Why are the Lions so low?
Sportico: Keep in mind that the team is still worth $2.14 billion! However, your point is well taken: The Lions rank next-to-last among all NFL teams. The prevailing reason is that Detroit, while the 14th largest media market in the nation according to Nielsen, has its share of challenges. They include strong competition for limited entertainment dollars. Last season, the Lions generated an estimated $111 million from its sponsorship and stadium (a figure that includes net revenue from road games), which ranked 29th among the league’s 32 teams. Two of the teams that fared worse, though, were the Las Vegas (then Oakland) Raiders and Los Angeles Chargers, which are moving into new venues in 2020 and are far more valuable as a result.
Reader: How much did the value of the Washington club change (up, down or flat) the moment the name was retired?
Sportico: Flat. And, there is a good way to measure this:
Sportico’s JohnWallStreet asked me to assess the value of the team’s brand on the morning of July 2. As it happens, the name change controversy re-erupted later that afternoon. At that time, I determined the brand to already amount to a “net-negative” for the franchise’s value. Then, the day the team retired its old nickname, I assessed Washington’s value at “more than $3.5 billion.” Once Sportico‘s deep dive into all NFL franchises was complete, the team’s fair-market value was determined with more specificity at $3.58 billion.
The better question is how much more would the team be worth had it changed its name years ago. The answer is, at a minimum, hundreds of millions of dollars.
When owner Daniel Snyder purchased the team in 1999, it was for five times its revenue or thereabouts—the absolute ceiling for a team sale at the time. Today, based on Sportico‘s reporting, 12 teams have higher estimated transaction multiples than Washington. This is to say nothing of the weakened cash flow caused by the team’s clinging to its old name; for instance, the season ticket waiting list declined from a claimed 200,000 names to zero.
Reader: What revenue jumps are calculated for the Raiders and Rams in new stadiums?
Sportico: The Raiders and Rams (and don’t forget about the Chargers) will see significant increases in revenues next year. For a good approximation of the anticipated change, check out perhaps the best feature of Sportico’s data visualization.
After the page defaults to the 32 teams being sorted by value, click the “Sort by Revenue” button, and see how much those three teams spin around the wheel. Stadiums (and for the Raiders, market as well) matter that much.
To submit additional questions on Sportico’s NFL Franchise Valuation Report 2020, please email Peter J. Schwartz at pschwartz@sportico.com.