The value of National Football League teams may reach $2 billion within a decade due to the 10-year labor and media deals signed by the U.S.’s most popular sport, according to Rob Tilliss, who represents buyers and sellers of sports franchises.
Teams that expensive may prompt the league to review its limits on debt, Tilliss, chief executive and managing partner at Inner Circle Sports LLC, said today at Bloomberg’s Dealmakers Summit in New York.
“You’ve got 10 years of runway with the new collective bargaining agreement” and media deals, Tilliss said. “The universe of buyers that can afford to pay $2 billion in 10 years for an NFL team gets pretty small.”
The Dallas Cowboys are worth $2.1 billion, according to Forbes annual valuation of sports franchises. The Cleveland Browns were sold on Oct. 16 for what ESPN said was more than $1 billion.
Sports teams “are not cash-flow businesses” and owners make most of their money through increasing franchise values and related revenue streams such as media and real estate, said Charles Baker, a partner in DLA Piper’s Corporate and Finance practices who handles sports transactions.
“I think if you buy at the right price, they can be very lucrative investments, particularly if you’re looking at teams that have ancillary assets,” he said.
John Moag, chairman and chief executive of Baltimore-based Moag & Co., which does sports investment banking and consulting, said the NFL remains a key driver of television ratings, while broadcast revenue helps increase franchise values.
“It’s media, media, media,” he said. “The content of the NFL is just so important that you have to have it.”