One NFL revenue stat shows why billionaires buy sports teams
A peek into the Green Bay Packers most recent earnings release might explain why Walmart (WMT) heir Rob Walton and his ownership group spent $4.65 billion on the Denver Broncos in June.
The Packers earned $347.3 million last season before selling a ticket or an Aaron Rodgers jersey through national shared revenue, which includes national media rights and sponsorships. That number is evenly distributed to all 32 NFL teams after each season.
Green Bay was 70% of the way to profitability before selling a beer at Lambeau Field, the home of the Packers. For billionaires looking for new investment areas, a live events business that’s nearly cash flow positive before the start of the live events has proven to be an attractive asset class.
“If you’re interested in holding something for the long term, I think there are plenty of funds and clearly plenty of high-net-worth individuals who are willing to do that,” Monumental Sports and Entertainment President Zach Leonsis told Yahoo Finance Live last month. "Sports have proven to drive incredible returns."
Perhaps the most eye-popping part of the NFL’s shared revenue is what it didn’t include. The Packers tacked on $231.7 million in local revenue to reach a franchise record $579 million in yearly revenue. The team profited $77.7 million from operations. The revenue increase helped offset $501.3 million in added spending due to delayed payments during COVID-19.
The league’s most recent shared revenue pop — which reached a record $11.1 billion — also didn’t include large media rights deals coming down the pike.
After this season, Amazon (AMZN)'s $1 billion annual spend to broadcast Thursday Night Football will be added into the shared revenue. In two years, the NFL’s Sunday Ticket package is expected to fetch $2.5 billion from a big tech company like Amazon, Apple (AAPL), or Google (GOOGL). Even the NFL’s latest project, NFL+ streaming, which charges $40 annually, will be added to that shared revenue number as well.
Today the Packers released their financial report for the 2022 fiscal year. Numbers included below.
Team also added 177K shareholders during latest stock sale, raising total number of owners to 539K. Hoping all of them will show up to the next NFL owners’ meeting in Palm Beach! pic.twitter.com/O3V65WZdLr— Matt Schneidman (@mattschneidman) July 22, 2022
With those numbers in the mix and growing advertisement revenue, the NFL’s shared revenue contribution to each team could close in on $500 million.
“This is a completely different risk profile than commercial real estate, stocks, than anything out there,” Michael Rapkoch, founder and CEO of Sports Value Consulting, told Yahoo Finance at the time of the Broncos' $4.65 billion sale. “The stock market can go down. The value of the Denver Broncos isn't going to go down.”
Rapkoch, who oversees team valuations, described the NFL as a “good buy,” at the time of the Broncos sale, and said the recent earnings results from the league have shown why.
“All I know is that every year, the NFL and all of the leagues have done a great of taking their league to the next level, and the proof is positive,” he said. “Leagues don’t go backwards.”
Josh is a producer for Yahoo Finance.
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