Is It a Good Idea to Invest in an NFL Franchise?
Author: Robert B.
December 15, 2021 (Investorideas.com Newswire) If you love watching NFL games, you might wonder whether investing in a football team is a sensible move.
What are the factors you need to take into account to understand whether this makes sense?
The Growth Rate and Return
One of the key aspects of any investment is how well it grows over time. This look at the growth rate of different sports franchises suggests that the NFL, the NHL, and the NBA all had growth rates of over 12% from 1991 through to 2016.
Some of the factors that determine the growth of the league are the amount paid by broadcasting companies to show the game and the player salary increases. If the trends move in the right direction, it can turn out to be an extremely lucrative investment.
In terms of the TV rights, a new deal starts in 2023 and runs until 2033, bringing the NFL a total of $113 billion in that time. When we look at the top salaries in 2021, Kansas City Chiefs QB Patrick Mahomes leads the way with $45 million annually, followed by John Allen ($43 million), and Dak Prescott ($40 million).
How Expensive Is It?
The new TV deal mentioned earlier has been a major factor in the value of NFL franchises increasing recently. At the top of the list, the Dallas Cowboys has been the most valuable franchise for more than a decade and is currently said to be worth $6.5 billion.
In second place, buying the New England Patriots would cost you $5 billion, with the New York Giants and the Los Angeles Rams not too far behind. As for the least expensive NFL franchises, the Cincinnati Bengals and the Buffalo Bills are close together at around $2.27 billion.
The average team value rose by 14% in 2021, mainly thanks to that bumper TV deal. These are all multi-billion dollar businesses and their value is likely to carry on growing, which is good news for anyone who has already invested in a football franchise.
Who Owns the NFL Teams?
Some of the top teams have been in the hands of the same families for years, which means that they bought the franchises for a very small amount compared to the current value.
For example, the longest-established owner is at the Chicago Bears. Virginia McCaskey and her family control 80% of the stock, after her father founded the team at the cost of $100 back in 1920. This means that it is one of the few teams still owned by the original family, whose fortune has largely been built thanks to the NFL.
At the other end of the scale, Jimmy Haslam bought the Cleveland Browns in 2012 for close to $1 billion. With an estimated fortune of about $3.7 billion, he is one of the richest owners in the NFL. Other billionaires who own franchises include David Tepper (Carolina Panthers), and Jerry Jones (Dallas Cowboys).
The idea of buying a football team and leading it to glory in the Super Bowl was once realistic to some degree, with some of the top teams changing hands for modest amounts in the past. However, you now need to be one of the richest people in the world to buy an NFL franchise. Nowadays it’s probably more profitable to learn on how to bet on NFL and create your own strategy based on algorithms and stats.
The league also looks for a single person to own at least 30% of the stake, to try and stop large, faceless groups taking over a team. Teams can’t be bought by people who have made their money from gambling or who own a different sporting franchise in the country.
For most of us, there is no realistic way of owning an NFL team. However, the Green Bay Packers recently launched a stock offer, selling 300,000 shares at $300 each to help them raise $90 million. As well as a potentially good investment, this lets fans own a small piece of a team.
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