As a sports fan, I’ve often asked myself this question. Today, Forbes had a great article which gives more insight into the answer to this questions.
It turns out that in 2003, no pro sports team in the world was worth a billion dollars. By the end of 2008, there were 24, led by European soccer powerhouse Manchester United.
It begs the question: Is pro sports a bubble? That’s hard to say. But with the economy in peril, the days of skyrocketing growth appear to be over, at least for now.
“We’re in for some trying times for the next year or so,” says Larry Grimes, a Washington, D.C.-based mergers and acquisitions consultant who specializes in the sports industry. What he sees ahead is not so much the bursting of a bubble, which by definition would include a wave of selling at distressed prices, but a leveling off of franchise valuations to reflect the current reality. With prospective buyers having trouble lining up financing, many current owners will have little choice but to sit tight and ride out the storm.
The $1 billion-and-up club isn’t particularly broad-based. By Forbes’ count, it consists of the New York Yankees, a handful of European soccer clubs and, well, most of the NFL. Spearheaded by the Washington Redskins, which became the first NFL team to break the billion dollar barrier in 2004, the league now boasts 19 of 30 clubs valued above the magic number. The Redskins have since been surpassed by the Dallas Cowboys, whose lucrative merchandising business and (starting next season) new stadium have pushed their value to $1.6 billion, second overall to Manchester United.
Other NFL teams in the top 10 include the New England Patriots (three recent Super Bowl titles), the New York Jets and Giants (a shared new stadium on the way) and the Houston Texans (the league’s biggest stadium naming rights deal). Even the NFL’s least valuable franchise, the Minnesota Vikings, is knocking on the door of billionaire row at $839 million.
Other than the Yankees, no baseball team has managed to crash the sports’ billionaire club. The most valuable NBA franchise, the New York Knicks, checks in at $613 million. In the NHL, the Toronto Maple Leafs lead the valuation standings at just over $400 million. But while businesses of the NHL, NBA and MLB don’t stack up to the NFL, the average team value has grown at a pace that doesn’t figure to be sustained much longer.
Major League Baseball’s 30 clubs are worth a collective $14.1 billion, up from $6.6 billion in 1999. Growth rates are similar in the NBA, to $11.4 billion from $5.3 billion, and in the television-challenged NHL, to $6.6 billion from $3.6 billion.