In a report not yet posted on its website, Forbes has determined that the average National Football League team is now worth $1.04 billion, a gain of 8.57% over last year, according to Reuters. When Forbes first started looking at NFL team values in 1998, the average was just $288 million.I'm a little bit skeptical of the valuations because, in a market as illiquid as major sports franchises, it's a huge guessing game. Teams are bought in large part for sentimental/ego reasons, so price/sales and price/earnings ratios are less meaningful than with conventional investments. If two billionaires grew up listening to the same team on the radio and the current owner is looking to sell, the winner will be whoever wants it most.
But it's still interesting: even though Major League Baseball teams play about 10 times as many games as football teams, only one MLB team is worth more than $1 billion (The New York Yankees), according to Forbes' latest report.
Part of the reason may be that the NFL, with its non-guaranteed contracts, is able to keep its player costs down. Tom Van Riper recently reported that "The owners already voted to opt out of the current collective bargaining agreement early, meaning that play could come to a halt after two more seasons."
So the owners are looking to pay players even less in the face of continued increases in team values. The players' union might have a very good rationale for protesting. This could shape up to be a pretty interesting bargaining session.
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