Sports team values - near the top?

[brobro777]

For as long as I remember, it has been a layup lock that sports team values increase over time

 

Now Cuban is cashing out of Mavs - https://www.espn.com/nba/story/_/id/39000963/adelson-family-advanced-talks-buy-significant-stake-dallas-mavericks - I'm wondering, are we near the top for sports team values? Maybe the increase in value declines a bit vs last 30 years? I get that there's massive TV and streaming rights and all but I never thought these teams made that much money

 

What say you guys

 

 

[Malmqky]

These teams have never been and never will be valued based on cashflow/what they earn. They’re trophy assets.

 

I think things might be slightly inflated due to a decade of low interest rates. For the NBA specifically however, I see growing international popularity and huge tv/streaming rights deals looming in the near future. I feel good about the NBA long term, and near term I think things will be fine too.

 

Something like Baseball however? Well…I’m not so sure about the future prospects.

 

Cuban specifically, I’m not sure if we can view him selling as a valuation based decision. He’s a serial entrepreneur who has many different interests/businesses. 

[Spekulatius]

Biggest risk is that the tax code changes and the intangibles paid for the team cannot be written off any more. If this happens, team values immediately would take a huge hit.

[Gregmal]

I have no idea why people keep coming to the table with “sports teams need to be valued on cash flow” stuff. Never have, never will. Same as the Mona Lisa.

[Gamecock-YT]

https://www.bloomberg.com/news/features/2023-11-22/utah-jazz-streaming-service-is-a-test-for-nba-nhl-post-rsn-model

 

Quote

Terms of the deal with KJZZ’s owner, Sinclair Broadcast Group, weren’t disclosed, but S&P Global Market Intelligence estimates that this season the Jazz will bring in 50% to 70% of the revenue they were getting from AT&T SportsNet, depending on their ratings and how many streaming subscriptions they sell. It’s a significant setback, Smith acknowledges, though he’s confident it’s temporary—and comes with a big upside for Jazz fans.

 

 

Also, what's the odds the Mavericks move to Vegas? Their lease expires in 2031? New owners are from Vegas who have a nice arena available.

 

https://www.dallasnews.com/sports/mavericks/2021/11/11/mark-cuban-likelihood-of-mavericks-staying-at-american-airlines-center-is-less-than-50/

 

Quote

Furthermore, Cuban in the next breath told The Dallas Morning News without being asked: “I’d say the likelihood of us staying at the AAC right now is less than 50%.”

He is of course referring to American Airlines Center, which four months ago turned 20. The Mavericks’ 30-year lease at AAC expires on July 28, 2031.

..

“It’s going to take five or six years to build anything,” Cuban said. “So we’re not that far off from making a decision.”

 

 

Quote

The Sands group, led by Miriam Adelson and her son-in-law and company president, Patrick Dumont, has previously had discussions with Cuban about building a casino entertainment district in Dallas that would include a new arena for the Mavericks. Those plans would require gambling to become legal in Texas, for which Cuban has lobbied state politicians.

 

[Malmqky]

13 minutes ago, Gamecock-YT said:

https://www.bloomberg.com/news/features/2023-11-22/utah-jazz-streaming-service-is-a-test-for-nba-nhl-post-rsn-model

 

 

 

Also, what's the odds the Mavericks move to Vegas? Their lease expires in 2031? New owners are from Vegas who have a nice arena available.

 

https://www.dallasnews.com/sports/mavericks/2021/11/11/mark-cuban-likelihood-of-mavericks-staying-at-american-airlines-center-is-less-than-50/

 

 

 

 

This is a terrible idea. Mavericks have a huge fan base in Dallas and it’s not like it’s a scrub market. Moving them would be value destructive and just a slap in the face to the fans. I have no insight if it’ll happen or not, and you make it sound like a real possibility. But man. This would be an out of touch, stupid, stupid idea.

 

Cuban selling ownership but retaining control of basketball operations seems like a sign it might happen. This way he can save face. If it doesn’t happen, I think a group of owners with Lebron as a figurehead will start a team in Vegas eventually.

 

 

[Gamecock-YT]

1 hour ago, Malmqky said:

This is a terrible idea. Mavericks have a huge fan base in Dallas and it’s not like it’s a scrub market. Moving them would be value destructive and just a slap in the face to the fans. I have no insight if it’ll happen or not, and you make it sound like a real possibility. But man. This would be an out of touch, stupid, stupid idea.

 

Cuban selling ownership but retaining control of basketball operations seems like a sign it might happen. This way he can save face. If it doesn’t happen, I think a group of owners with Lebron as a figurehead will start a team in Vegas eventually.

 

 

can always cash out and he gets an expansion team back in DFW. That same article off ESPN which is the third quote mentioned the Adelson’s were the biggest donor for the governor’s campaign so maybe them becoming majority owner greases the wheels a bit to get gambling and the casino build but no doubt they’ll probably leverage the Vegas arena as an option

[Parsad]

I think he's going to run as a Presidential candidate.  Cheers!

[Parsad]

15 minutes ago, Parsad said:

I think he's going to run as a Presidential candidate.  Cheers!

 

Well, I guess he isn't after all:

 

https://bleacherreport.com/articles/10099175-mark-cuban-no-chance-ill-run-for-president-after-mavericks-sale-shark-tank-exit?utm_source=cnn.com&utm_medium=referral&utm_campaign=editorial

 

Too bad!  Hey but Prime Minister is available!  Cheers!

[brobro777]

I get the trophy asset/Mona Lisa argument but cash flow's gotta be somewhat important, no? Oakland A's are losing money and they can't all issue bonds like Man U...

 

I don't like Cuban much but I get the feeling he's got good sense for timing

 

 

[fareastwarriors]

2 hours ago, brobro777 said:

Oakland A's are losing money

 

They will be ok.

 

The most immediate impact on the team’s income statement will be from MLB’s revenue-sharing distribution. MLB’s last collective bargaining agreement made the A’s eligible for that windfall, but there was a hitch. The A’s would receive only a 25% share in 2022, a 50% share in 2023, a 75% share in 2024 and a full share in 2025. The shares in the last two years were contingent upon the A’s having an agreement in place for a new ballpark by 2024. No agreement, no revenue sharing.

 

The team’s 25% take in 2022 amounted to $9 million, meaning a full share would have been $36 million. Assuming the agreement for a new ballpark in Las Vegas is in place by January 15, the team is going to get upwards of $50 million from revenue sharing in 2024 and 2025 combined.

 

While $50 million may not seem like a ton of money considering the billions flying around in team valuations, it would have been substantial for the beleaguered A’s. That figure would represent almost one-quarter of the team’s total revenue prior to the $9 million of revenue sharing it booked and more than 70% of its total player costs, including workers’ compensation and insurance and bonuses.

 

 

 

TEAM VALUE $1.18B Calculated March 2023

https://www.forbes.com/teams/oakland-athletics/?sh=171d465a26ac

 

Yea, It will be alright

Edited November 30, 2023 by fareastwarriors

[brobro777]

2 hours ago, fareastwarriors said:

 

They will be ok.

 

The most immediate impact on the team’s income statement will be from MLB’s revenue-sharing distribution. MLB’s last collective bargaining agreement made the A’s eligible for that windfall, but there was a hitch. The A’s would receive only a 25% share in 2022, a 50% share in 2023, a 75% share in 2024 and a full share in 2025. The shares in the last two years were contingent upon the A’s having an agreement in place for a new ballpark by 2024. No agreement, no revenue sharing.

 

The team’s 25% take in 2022 amounted to $9 million, meaning a full share would have been $36 million. Assuming the agreement for a new ballpark in Las Vegas is in place by January 15, the team is going to get upwards of $50 million from revenue sharing in 2024 and 2025 combined.

 

While $50 million may not seem like a ton of money considering the billions flying around in team valuations, it would have been substantial for the beleaguered A’s. That figure would represent almost one-quarter of the team’s total revenue prior to the $9 million of revenue sharing it booked and more than 70% of its total player costs, including workers’ compensation and insurance and bonuses.

 

 

 

TEAM VALUE $1.18B Calculated March 2023

https://www.forbes.com/teams/oakland-athletics/?sh=171d465a26ac

 

Yea, It will be alright

 

Damn not bad for Empty stands and 60 games below 500

 

 

[Gregmal]

Sports leagues are legal monopolies and the teams are businesses/hobbies that come with a perpetual handjob for one’s ego. 

[Spekulatius]

ultimately the value of the sports teams depends on the revenues they can pull in, which is mostly from media/TV income. Even billionaires don't like losing money on an trophy assets even if it comes with an ego booster.

 

So far media revenue has been rising quickly even though expenses matched the rise in income but I think eventually that revenue increases will subside since the ecosystem with streamers and cable isn't exactly healthy.

[dwy000]

The value of teams is driven by ego not cash flow.  But that's why they are generally poor stock investments when the stub is public. You don't get the ego boost that the majority owner does but you suffer the cash flows.  If your holding period is shorter than the majority owner's you will never be able to realize on whatever discount the market decides is applicable.