NFL Teams are Billion-Dollar Businesses

The average value of an NFL team is now $6.5 billion, according to CNBC's Official 2024 NFL Team Valuations. This demonstrates the incredible financial success of the league, with owners seeing massive returns on their investments.

The Houston Texans, valued at $6.35 billion, have seen their value increase over 10 times since their purchase in 1999.

Across the past 10 NFL teams to be sold, seven of the 10 outperformed the S&P 500 in terms of percentage gains.

Rising NFL Team Valuations: Media Deals as the Driver

The primary driver behind the increasing valuations is the NFL's massive and growing media deals. These contracts, worth billions of dollars, bring in substantial revenue for the league, and in turn, for individual teams.

The NFL's current television agreements with Comcast, Disney, Paramount, and Fox are worth an average of $9.2 billion a year.

Streaming deals with YouTube and Amazon Prime for NFL Sunday Ticket and Thursday Night Football, respectively, further contribute to the league's media revenue.

The NFL's Revenue Sharing Model: A Competitive Advantage

The NFL's revenue-sharing model is a key factor in its financial success. Teams share national media deals, sponsorship and licensing agreements, and a significant portion of gate receipts. This allows for a more level playing field and ensures that teams in smaller markets can compete.

In 2023, $13.68 billion, or 67%, of the NFL's $20.47 billion in revenue was shared equally.

The salary cap limits player spending to about 49% of revenue, further promoting competitive balance.

Stadium Revenue: A Significant Contributor to NFL Team Values

While the NFL shares a significant portion of revenue, individual teams retain revenue from sources like luxury suites, on-site restaurants, merchandise stores, sponsorships, and non-NFL events held at their stadiums. These non-shared revenue streams contribute significantly to team valuations.

Taylor Swift's Eras Tour generated substantial revenue for NFL stadiums that hosted the concerts. One stop netted $4 million in revenue per show.

The Miami Dolphins' Hard Rock Stadium earned over $30 million last year from college football games, soccer matches, concerts, festivals, and tennis matches.

NFL's Financial Success: Driving Higher Premiums for Team Sales

The NFL's financial success has driven higher premiums for team sales. Prospective owners are willing to pay significant amounts for the opportunity to own a franchise, further boosting team valuations.

Rob Walton paid $4.65 billion, or 8.8-times the team's revenue, for the Denver Broncos in 2022.

The average value-to-revenue multiple in CNBC's 2024 ranking of all 32 teams is 10.2.

Josh Harris purchased the Washington Commanders for $6.05 billion, or 11-times revenue.

Private Equity Investments: Fueling Future NFL Growth

The high valuations of NFL teams have attracted the interest of private equity firms. The NFL recently allowed select private equity firms to invest in NFL franchises, which could further accelerate team valuations.

Ares Management, Sixth Street Partners, Arctos Partners, and a consortium of Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners, and Ludis are among the firms allowed to invest.

These firms have committed $12 billion in capital over time.