In the North American professional sports market in recent years, the price of team transfers has become higher and higher. This summer, Josh Harris' HBSE Group bought the N.F.L.L.'s Washington Commanders for a record $6.05 billion, Jordan spent $275 million when he took over the Hornets in 2010 and eventually sold it for $3 billion, and Mark Cuban bought the Mavericks for $280 million in 2000 and sold them for $3.5 billion in November.
The same is true for the European market, where AC Milan was valued at €500 million to €600 million in 2018, compared to a €1.2 billion acquisition by RedBird Capital last year. In October this year, Qatari capital party Jassim conveyed a bombshell news to the outside world, he offered a plan to buy Manchester United for nearly $7 billion, promising to repay Manchester United's debts, although it was ultimately rejected by the Glazer family.
Are these teams really worth that much money?
On December 5, at a collegiate sports forum hosted by Sports Business Journal, RedBird founder Gerry Cardinale said: "Mark Cuban's sale of the Mavericks is surprising and raises speculation about whether the sports market is overvalued." It's impossible for a team to go up all the time, and I think all sports are overvalued. ”
Cardinale's words are more categorical, but they are certainly worth thinking about.
It has been put into the melting pot of the entertainment industry, and the value of sports assets has increased
In 2023, Forbes released the 25 most valuable "sports empires", with a total value of $173 billion, up 23% from last year. Forbes adds a 10% premium to "sports empires" such as Kroenke Sports & Entertainment and Liberty Media Group, illustrating the wealth of possibilities that come with owning multiple sports assets at the same time. Even after the premium is removed, it is still up 12% from last year to $158 billion.
These "giants" increase the value of their teams in many ways, such as buying more teams, buying media rights at exorbitant prices and using streaming to expand content distribution channels, cross-selling sponsorships through various sports assets, developing mixed-use real estate, investing in sports-related technology, betting, and more.
MSE (Monumental Sports and Entertainment) is a prime example. MSE's assets include the NBA's Washington Wizards and the NHL's Washington Capitals, both of which are also owned by MSE. Recently, MSE began its dabbling foray into media broadcasting with the acquisition of a 66 percent stake in NBC Sports Washington, which owns the rights to the capitals, the Wizards and some other local teams.
In addition, many sports-related industries have contributed to the increase in team value and copyright value, mainly in the North American market:
- 服装：2026年，全球运动和健身服装市场预计将达到2213亿美元，较2020年增长29%。 （数据来源：Sports & Fitness Clothing - Global Market Trajectory & Analytics）
- Game day: The average cost of an NFL game for a family of four in the U.S. is $568.18, followed by the NHL ($462.58), NBA ($444.12) and MLB ($256.41), including tickets, food, merchandise and parking. (DATA SOURCE: TEAM MARKETING REPORT)
- Gaming: Since 2018, when the U.S. Supreme Court ruled that sports betting in U.S. states was legal, it has had a profound impact on the global sports industry. Americans' legal betting on sporting events has approached $135 billion. New Yorkers alone have wagered nearly $8 billion since mobile betting was legalized last year. (Source: US Sports Betting Revenue & Handle)
- Media rights: In recent years, streaming media and cable TV have competed in the event rights market, which has ensured event copyright income to a certain extent. The reason why NFL teams are selling more and more expensive is driven by sky-high broadcast contracts of $110 billion.
- Physical Training: The $17 billion physical education industry in the U.S. continues to expand, with U.S. parents spending more than $20,000 annually on their children's travels, competitions, camps and equipment. (Source: ESPN)
Driven by these industries, the popularity of sports has not decreased, and the value of sports assets has naturally risen. While all the data suggests that the sports industry is improving, there are still many people who doubt that the value of the team will continue to rise, and Cardinale is not the only one who is skeptical. In other words, if Jordan and Cuban feel that the value of NBA teams can continue to rise, they will not choose to cash out at a high level.
Whether it is worth it or not depends on the copyright fee after all
BEFORE SELLING HIS MAJORITY STAKE, CUBAN WAS A GUEST ON MATT BARNES AND STEPHEN JACKSON'S PODCAST ALL THE SMOKE, EXPRESSING SKEPTICISM ABOUT THE NBA'S RISING BROADCAST FEES. "The next broadcast deal should be good, but I don't think it's going to be as good as the last one, but I'm more worried about the next one," Cuban said on the show. ”
Cuban argues that the NBA is shooting itself in the foot if it doesn't use streaming to raise the price of its next broadcast deal. NBA commissioner Xiao Hua has also said that the decline of cable television has had a big impact on the NBA.
Live sports have long been considered the engine of the TV industry, driving paid subscriptions and driving ad revenue growth. Streaming media also took a fancy to this, so they continued to seize the sports market. Live sports almost single-handedly contributed to the birth of the pay-TV business in the United States.
While there are still about 65 million households in the U.S. watching sports on traditional cable TV in 2023, and many more watching through online TV, U.S. TV media outlets are facing increasing market pressure. This pressure has to do with the rapid growth of streaming, which has taken up a lot of users' time and continues to buy rights to sporting events.
The top five European leagues seem to be colder than the North American leagues, and the copyright fees of the five major leagues have reached a bottleneck, and there is even a trend of falling instead of rising. Although the Premier League signed a new broadcast deal worth a total of 6.7 billion pounds in December this year, setting a new record in world football, the price of 6.7 billion pounds in four years has not risen significantly compared with 4.8 billion pounds in the previous three years.
The skeptical voices represented by Cardinale and Cuban are only the judgment of some investors, and there are many investors who are very optimistic about the price of sports assets. After all, some people sell it, and some people take it.
Rules for private equity investments in North American sports leagues
In the past five years, after the North American sports leagues have allowed private equity investment, private equity has become a major player in sports asset auctions, and has begun to compete with the superrich for "toys". However, rules vary from league to league, such as the percentage of private equity investment allowed, the minimum investment, and the maximum number of teams a fund can hold. Kyle Walters, an analyst at financial data firm PitchBook, said there have been at least 20 private equity investments in North American sports league teams since 2019. This compares to just six from 2016 to 2019.
In September, PitchBook's latest data showed that 62 North American sports league teams had "connections" to private equity, which included private equity investing directly in teams or owning stakes in team holdings. Soaring team valuations are the main reason for private equity's interest. For example, according to Sportico, the valuation of the Dallas Cowboys will grow by 20% to $9.2 billion by 2023.
The increase in private equity investment in sports reflects the value of sports assets as a long-term investment. In the end, whose judgment is correct, it is time to compete who has more foresight between the old rivers and lakes and professional institutions.