Sports teams were once considered unpredictable investments, but in the last few years, valuations have been rising—making sports teams one of the most attractive investment assets.
Key Details
- The world’s 50 most valuable and profitable sports team franchises are worth a combined $222.7 billion, 30% more than a year ago, according to Forbes.
- The average Major League Baseball (MLB) team value is up 12% this year to $2.32 billion.
- In 2022, the average National Basketball Association (NBA) team was estimated to be worth $2.86 billion, 15% more than the year before.
- The average National Hockey League (NHL) team went above $1 billion for the first time, reaching an average of $1.08 billion.
- The highest average of the four major sports leagues is the National Football Association (NFL), with an average team worth $4.47 billion, an increase of 28% year-over-year, according to Forbes estimates.
Why it’s news
Over the last few decades, the value of all of the United States’ major sports leagues has increased significantly, mainly because professional sports have remained profitable during major economic turndowns.
Sports teams have become the world’s most consistently profitable and highly sought-after investment opportunities in the last few decades. Two other reasons that sports teams are now extremely valuable—technology has opened up many opportunities to watch sports, and a limited number of teams can be purchased.
In the beginning days of sports, team owners made the majority of money from ticket and merchandise sales. Now a majority of the money comes from advertising and media rights.
The rise of television helped the price of significant sports teams rapidly increase because television allowed more people to be able to watch sporting events, thus making the teams more valuable.
For example, The 2023 Super Bowl received an estimated 113.06 million viewers on Sunday, February 12, according to average audience estimates from Nielsen. To reach the millions of fans watching, advertisers spend an average of $5.6 million for a 30-second Super Bowl commercial.
Along with advertising, Sports Media is a huge driving factor behind the rising price of sports franchises. Cable TV numbers have been slipping in recent years, but one of the main reasons consumers continue to pay for the service—sports.
From 1980 to 2023, the five most significant professional U.S. sports leagues will have earned $210 billion from media rights alone, according to a Bloomberg News analysis—the NFL accounting for 65% of it.
Disney also recently agreed to pay a 30% increase in rights fees to around $2.6 billion annually to retain ESPN’s Monday Night Football rights. Whenever a new media contract is signed for a sporting league, it increases the value of each team within the league, making sports a valuable investment asset.
Despite the many economic downturns, including the 2020 pandemic, the war in Ukraine, and the current downturn, the four major sports teams remained in good standing.
The pandemic did cause losses, with the NBA falling 2% on average, according to a Forbes estimate, before immediately rising again the following year. Due to the values mostly withstanding economic downturns, it makes the teams a good investment.
Although many think that sports teams are one of the best money-making opportunities in the world, others believe investors should be more careful. There is no such thing as a risk-free business—even in sports.
A business can always change, and although values tend to stay up, a simple thing like a number one player injury or a team controversy can drop the value of a team quickly.
