Where Does Value Lie in a Sports Franchise Valuation??
by Brad Sarna The staggering figures that sports franchises have recently sold for have caused many an eyebrow to rise in an attempt to find where the true value lies in these transactions. The trend is continuing as the Chicago Cubs are expected to be sold for more than a reported $1.3 billion and the Pittsburgh Steelers are rumored to be up for sale for possibly $1.2 billion. Is it simply wealthy men paying a premium to join one of the most exclusive clubs in the country or is it something more tangible that is leading to these record deals? When examining the value of a franchise the main drivers of value include the various revenue streams, the market size, any broadcast deals, the prestige factor, and most importantly the stadium deal or leasing arrangement. These are not the only drivers of value but are the most significant. • Revenue streams such as ticket sales, advertising, parking, concessions, television/radio contracts, luxury suite sales, and naming rights deals determine
