The Denver Broncos have not yet hit the auction block, but it is coming. Potential bidders are already circling the team that was put in a trust in 2014 by owner Pat Bowlen, who suffered from Alzheimer’s and died in 2019. His seven children can’t settle on a chosen successor, and while there is a remote scenario where 31-year-old Brittany Bowlen grabs control, the near-universal expectation is that the Broncos will hit the market after the 2021 season.
The price will shatter the previous record sale of an NFL team—$2.28 billion for the Carolina Panthers in 2018. Bowlen paid $78 million for the Broncos in 1984, but one longtime NFL owner speculated that the price is more likely to start with a 5, than a 3, as in billion, which would make it more than double the previous high-water mark. Sportico conservatively values the team at $3.8 billion, No. 11 among the 32 franchises.
The Dallas Cowboys are the most valuable NFL team for a second-straight year at $6.92 billion, despite only four playoff wins over the past quarter-century. America’s Team is worth nearly double the NFL average of $3.5 billion, which is up 13% from last year. Collectively, the value of NFL franchises, including team-related businesses and real estate held by owners, is $112 billion.
Sportico projects NFL teams will generate revenue of $550 million per team this season on average, assuming the league plays a complete 17-game schedule with fans in attendance. With a season of full stadiums, the Cowboys should be the first team in North American sports to post $1 billion in annual revenue.
Sportico talked to more than 30 people at teams, banks, law firms and consultancies that do business with the NFL, and the overwhelming consensus: Business is booming. What’s not to like with $113 billion in new media deals and a collective bargaining agreement that nearly ensures labor peace through the end of the decade? TV ratings and profits are the envy of every sports league, and the league is also in the catbird seat for the oncoming gambling rush.
“The NFL expanded the gap between itself and all of the other sports leagues during COVID,” said Marc Ganis, who serves as a consultant for multiple NFL teams. “It really is like Amazon and Apple. That is where the NFL is as a business.”
A 13% gain in value might seem modest for the most stable and profitable sports league when bitcoin is up 500% over the past year; meme/Reddit stocks like GameStop quadruple over two days; and Major League Soccer teams with minimal revenue sell for $400 million and more. But the percentage represents an average increase of $415 million per franchise over 12 months.
All 32 teams share in the NFL’s dominant position across media, national sponsorships and gambling, resulting in an expected $400 million distribution, per team, from the NFL in 2023 when the new TV deals kick in, up from $309 million last year. By that time, nearly every team will generate at least $100 million in annual cash flow, with more successful teams north of $200 million. So even the Cincinnati Bengals, almost universally perceived as the least valuable NFL team, could fetch $2.4 billion on the open market, or more than all but seven MLB teams.
NFL Team Sales
NFL franchises almost never come up for sale—the Panthers the only team to change hands during the past seven years, and the three previous sales involved Buffalo, Cleveland and Jacksonville, all franchises that rank among the seven least valuable.
The average NFL ownership tenure, at 40 years, is double the other major U.S. sports leagues. Speculation swirled that Carolina would attract bids as high as $3 billion when Jerry Richardson put the club up for auction in late 2017, but they did not materialize, and David Tepper nabbed the team for $725 million less. The Broncos will be a litmus test on how high an NFL franchise price can go.
“You need two whales who want it,” said one banker. “That is not going to happen everywhere, but there is a chance that happens in Denver.”
Tepper was the only “whale” that emerged in Carolina, and the NFL did a post-mortem on the sale process and its ownership rules. The tweaks included an end to the cross-city ownership prohibition, which prevented owners from having non-NFL teams in markets with NFL clubs. Debt limits were also bumped $150 million to $500 million for an acquisition. This year, the league approved up to $1 billion in debt for the acquisition of a control ownership interest. Fitch Ratings classifies the NFL-related bond issuances with high credit ratings of A+ or A, and Chad Lewis, a senior director at Fitch, told Sportico the outlook is “very stable” based on the CBA and media deals.
The NFL requires the lead owner to hold at least 30% of the equity in the team, and the prohibition against corporate ownership and private equity investment means a shallow pool of capable and interested buyers, despite rising equity markets; there is almost zero interest in NFL ownership by people outside North America. Raising limited partnership stakes of $200 million is a lot trickier than ones for $20 million when you get almost nothing for that piece of the team.
"There are plenty of billionaires that want to invest in sports, and the NFL carries the least risk,” said one prominent sports banker. “But the problem is that the prices are going up so high that the number of people that can actually bid is tiny."
So despite price inflation in MLS, bitcoin and elsewhere, most bankers think NFL teams are still worth 5.5-7 times revenue under the current ownership requirements, similar to revenue multiples in recent years, with the Broncos at the high end of the scale.
Business is Thriving
NFL fans are itching to get back to games after a year mostly away; overall attendance was down 93% in 2020 due to COVID-19 restrictions. Season ticket renewal rates this season of 92% equaled a five-year high, and resurgent teams like the Cleveland Browns were up above 99%. Tampa Bay, which has struggled to sell tickets in recent years, sold out its ticket inventory during the summer at as much as a 45% premium following its Super Bowl title. The Bucs are worth $2.8 billion, up 22%, and rank No. 25, by Sportico’s count, with the Browns a spot behind at $2.73 billion, up 16%.
For Sportico’s interactive 2021 NFL Franchise Valuations, click here.
With the media deals and ticket revenue locked in, the next wave of revenue opportunities is forming. Four years ago, commissioner Roger Goodell said, “We are not changing our position as it relates to legalized sports gambling. We still don't think it is a positive thing.” It is safe to say the “position” has changed, and the league is all in.
In April, the NFL announced its first U.S. sportsbook partnerships with Caesars Entertainment, DraftKings and FanDuel; the league later added Fox Bet, BetMGM, PointsBet and WynnBet as approved advertisers during games. The New Orleans Saints announced a 20-year stadium rights deal with Caesars in July, 12 months after the Raiders christened their new $1.9 billion Las Vegas stadium after relocating from Oakland. The NFL awarded Genius Sports the exclusive right to distribute gambling data to sports books around the world, as first reported by Sportico. The six-year deal tripled the prior cash payment from Sportradar, according to one source, and it included an equity component worth $475 million based on the company’s recent share price.
Local team revenue from sportsbooks, casinos and daily fantasy has tripled over the past three years and is now a nine-figure business, with some teams generating as much as $10 million annually in revenue. That is just a taste of where revenue is headed as legalization spreads and gambling opportunities become more ubiquitous around game action. In January, the Washington Football Team became the first NFL team granted a sports betting license, through a partnership with FanDuel in Virginia. The club just secured another license in Maryland.
NFL on TV
The NFL entered media negotiations from a position of strength with 73 of the 100 most-watched programs in 2019, according to Nielsen. It allowed the NFL to secure an opt-out after seven years if it finds a more lucrative or beneficial option.
The last major component of the NFL media package is Sunday Ticket. DirecTV’s $1.5 billion-a-year deal expires after the 2022 season, and the service provider’s parent, AT&T, has indicated it will not renew. The league is expected to announce a new partner early next year.
“I think Sunday Ticket could tie-in to perhaps the biggest media deal that is out there, which is selling a percentage of NFL Media,” said media rights consultant Lee Berke in a phone interview. Goldman Sachs was hired this year by the NFL to sell a stake in its media business, which includes NFL Network, RedZone and NFL.com. Berke thinks Disney/ESPN, Comcast/NBCU and ViacomCBS could bid for both NFL Media and Sunday Ticket, given their ongoing status as league media partners, but that Apple and Amazon offer up resources beyond just production and distribution. Amazon already has a relationship with the league; it signed a 10-year deal in March to stream Thursday Night Football. Apple is building out its sports division.
Berke thinks there are many ways a high-powered partner could help the NFL further exploit its content, domestically and globally, and he expects the Sunday Ticket rights alone can command $2.5 billion a year. “When it comes to an equity stake in NFL Media, you are doing more than just buying a package of games that has an end date, you are buying a long-term relationship with the biggest sport in the world's richest economy,” he said.