Forbes

Pan­demic-Proof

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De­spite be­ing blind­sided by the coronaviru­s, the Na­tional Foot­ball League’s cash jug­ger­naut pow­ers on.

De­spite be­ing blind­sided by the coronaviru­s, the NFL cash jug­ger­naut pow­ers on, with the av­er­age team worth more than ever in 2020. Those empty seats will be filled again some­day, af­ter all.

(In­set) Las Ve­gas Raiders owner Mark Davis

The NFL is back, bring­ing with it the two most ex­pen­sive stadiums ever built: Stan­ley Kroenke’s $5 bil­lion SoFi Sta­dium in Los An­ge­les and Mark Davis’ $1.9 bil­lion Al­le­giant Sta­dium in Las Ve­gas (page 17). The venues were the cap­stones of two fran­chise re­lo­ca­tions and helped tur­bocharge those teams’ val­ues: The Los An­ge­les Rams are now worth $4 bil­lion, up 176% in five years; the Las Ve­gas Raiders are up 117% over the same pe­riod, to $3.1 bil­lion.

Un­for­tu­nately, SoFi and Al­le­giant opened in front of empty seats and va­cant boxes, as virus re­stric­tions will keep fans in both cities ab­sent all sea­son. Still, the Rams’ and Raiders’ val­u­a­tions are both up year­over­year in 2020, as is every other NFL fran­chise save the Cincin­nati Ben­gals, who were flat and who are the league’s least valu­able team, at $2 bil­lion. The av­er­age fran­chise value ($3.05 bil­lion) is up 7% from last year and tops $3 bil­lion for the first time. That’s be­cause most bankers look at the po­ten­tial $5 bil­lion or so rev­enue hit NFL own­ers will likely take this year as just a one­year blip.

The NFL gravy train, which in 2019 pro­duced av­er­age op­er­at­ing in­come (earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion) of $109 mil­lion per team, is there­after ex­pected to pick up where it left off. The league’s na­tional me­dia­rights deals, which are split evenly among the 32 teams, av­er­age $7.5 bil­lion per year, with ne­go­ti­a­tions on­go­ing for even more lu­cra­tive tele­vi­sion agree­ments that will kick off in 2023. The NFL is un­matched on TV, ac­count­ing for 42 of the 50 most­watched pro­grams in 2019, and the new col­lec­tive­bar­gain­ing agree­ment added more TV in­ven­tory: two ad­di­tional play­off games start­ing this sea­son.

An­other fac­tor that keeps val­u­a­tions high: NFL teams rarely change hands; av­er­age own­er­ship ten­ure is four decades. “It could take 30 years” to snag a team, says sports in­vest­ment banker Sal Gala­tioto, who says he knows at least a half­dozen multi­bil­lion­aires who are look­ing to buy a fran­chise. “That scarcity fac­tor holds val­ues up.”

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 ??  ?? Rev­enue and op­er­at­ing in­come are for the 2019 sea­son and are net of sta­dium rev­enue used for sta­dium debt ser­vice. Cur­rent value is en­ter­prise value (eq­uity plus net debt) of team based on cur­rent sta­dium deal (un­less new sta­dium is pend­ing). Op­er­at­ing in­come is earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion.
Rev­enue and op­er­at­ing in­come are for the 2019 sea­son and are net of sta­dium rev­enue used for sta­dium debt ser­vice. Cur­rent value is en­ter­prise value (eq­uity plus net debt) of team based on cur­rent sta­dium deal (un­less new sta­dium is pend­ing). Op­er­at­ing in­come is earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion.

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