Broncos $4.65B Price Shows NFL Ownership Rules Working Just Fine

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The last NFL team sale, pre-Denver Broncos, was the Carolina Panthers; the franchise hit the market in late 2017, and bids were expected to reach as high as $3 billion. A pair of NBA teams—the Rockets and Clippers—fetched at least $2 billion in prior years and pundits figured entry to the world’s most valuable sports league should command a rich premium.

Those lofty bids never materialized, and David Tepper nabbed the team for $2.28 billion, a tick ahead of the Rockets price.

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The NFL did a post-mortem on the sale process and its ownership rules and ultimately tweaked a few of them. The cross-city ownership prohibition was eliminated, and debt limits were raised from $350 million to $500 million, and later doubled to $1 billion for new owners during a purchase. But the NFL stuck to its 30% control owner minimum stake—twice the NBA requirement—and has still refused to open its doors to institutional investors, unlike the other four major U.S. sports leagues.

It appears the rules for buying a franchise won’t need any further tweaking for now, after Rob Walton secured the Broncos for $4.65 billion, more than twice the Panthers deal and 41% ahead of the previous record sports team sale, $3.3 billion for the Brooklyn Nets and rights to the Barclays Center in 2019.

Walton, who is worth $59 billion, could write a check for just about any price, but there were at least two other groups willing to pay more than $4 billion for the team. The multiple bidders at that level indicate the NFL has not gotten too big to sell under its current rules.

“What this does is validates that the NFL can have multiple, extremely strong bidders with its existing rules,” Marc Ganis, co-founder of Sportscorp, said in a phone interview. “They can be tweaked a little bit here and there, like raising the debt limit, but without changing the way the league is governed and the people who will show up at the owners meetings.”

Ganis doesn’t think the NFL is close to opening up to corporate or institutional investment. Other leagues approved private equity money to help move limited partner stakes that sat on the market for years in some cases. “The NFL is a very different economic model, as the balance sheet and the valuations are generally in sync with each other,” Ganis said. “That is not the case with some of the teams in the other leagues. They needed to find a way to bring in outside, additional capital.”

Recent NFL sales have looked cheap, relative to the NBA, based on price-to-revenue multiples, the preferred metric for most sports bankers. The Jaguars and Browns sold in 2012 for 3-to-4 times revenue, while the Panthers and Bills (2014) fetched 5.5-to-6 times revenue. Meanwhile, the Clippers (2014) and Nets (2019) both sold at multiples north of 10, and the Rockets (2017) were around 7.5; smaller market teams (Jazz, Bucks, Hawks) ranged from 5.5 to 6.5 in their deals. It drove part of the narrative around calls for the NFL to change its rules.

Sometimes, it is about having the right team sold. The Broncos are the first top-20 NFL team to sell since the Dolphins in 2009—Denver ranked 11th in Sportico’s 2021 NFL valuations. And the better market triggered a higher multiple, roughly 8.7, based on 2021 team revenue. It bodes well for Seattle, which is expected to be the next NFL team on the market; the Seahawks ranked 12th in Sportico’s valuations.

The Broncos are a much more desirable franchise than any recent NFL team sale, but much has also changed in the NFL landscape since the Panthers’ deal. The league was coming off a 10% drop in its TV audience in 2017 and was being antagonized by the White House for players kneeling during the national anthem. Today, the NFL has labor peace locked in through 2030, an expanded schedule, $113 billion in new TV deals, and additional revenue streams, including gambling, that are expected to drive revenue even higher. Scarcity value also helps prop up valuations. The average ownership tenure is 41 years—the median is 31 years.

“When a team that is not in a major market and is not considered one of the glamour teams gets a number like [$4.65 billion], compared to $3.16 billion for Chelsea, a glamour team in a major market,” Ganis said. “It clearly demonstrates once again the NFL is the top sports league on the planet.”

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