The NFL just finished a monster season that generated over $20 billion in league revenue off the field. A record 123 million people watched the Super Bowl, giving the Chiefs their third trophy in five years. His other consolation prize to his 31 NFL owners: his more than $400 million check from the league, split evenly between the revenues.
The revenue streams for sports teams and leagues haven't changed much over the past 40 years. Tickets, sponsorships and broadcast rights continue to be the primary sources of revenue, while concessions, parking, merchandise and non-team events dominate the income statement. Whether you're the NFL's Dallas Cowboys or MLS's CF Montreal, in North America he represents the most valuable and least valuable franchises among the five major sports leagues. doesn't matter.
However, the sizes of these various buckets are changing and vary widely from league to league, which impacts how bankers and investors value these clubs.
Here's a breakdown of how major sports leagues and their teams make money.
NFL
The average value of an NFL franchise is $5.14 billion, and the difference between the least valuable (Cincinnati Bengals) and the most valuable (Cowboys) is just twice that. This is the narrowest spread of the five major sports leagues (MLB has 7x) and is a function of the league's economic system, which has roots dating back to the early 1960s when New York Giants owner Wellington Mara This goes back to the fact that he supported the equal distribution of television revenue among all teams. Market size.
Mara's decision means each team will receive about $400 million from the NFL in 2023 from league media and sponsorship deals. Television is driving this train, with the latest set of updates from ESPN, NBC, CBS, Fox, Amazon, and YouTube worth his $125 billion.
Each team also receives just over $20 million as part of the NFL's ticket-sharing agreement, which stipulates that 34% of each team's ticket revenue will go to a general pool and be shared equally. is required. As a result, 66% of the NFL's $18.7 billion in 2022 revenue was split evenly among the 32 teams.
NFL teams only play 10 home games a year, including preseason, but they still generate more than $3 billion in ticket and suite revenue annually, or 17% of the total. And while MLB, NBA and NHL teams agonize over regional sports network deals, the NFL is once again sitting in the weasel seat. Almost all TV inventory is managed at the league level, so thank you, Mara. Local media rights are limited to radio and preseason games.
MLB
When it comes to RSN concerns, no league is more affected than Major League Baseball. Local media (primarily television) accounted for 23% of the $10.9 billion in revenue generated by the 30 teams in 2022. This percentage is double that of the NHL, and the NBA's 13% exposure will decline once the next national television deal is completed. this year.
Diamond Sports Group, which manages the Bally Sports RSN, has terminated its rights agreements with the Arizona Diamondbacks and San Diego Padres during the 2023 season. Bally Sports, which declared bankruptcy, will broadcast games from 12 MLB teams this year after approving a deal to broadcast games between the Texas Rangers, Cleveland Guardians and Minnesota Twins through the 2024 season. The jury is out on how many years it will take the Rangers to financially recoup the lost rights fees from those contracts, which in the case of the Rangers amounted to more than $100 million a year.
Baseball provided the perfect foundation for RSNs as they proliferated in the 1990s and 2000s. For six months, the sport aired his highly rated three-hour matches, primarily in prime time, with parallel pre- and post-game programming.
Baseball RSN ratings remain strong, with baseball being the No. 1 prime-time show on cable in most MLB markets. The Boston Red Sox, New York Yankees, and many other teams collect high rights fees from RSN and still make a profit.
While local media is an important source of revenue for MLB, it still falls short of ticket revenue (31%) and median revenue (26%) for the 30 teams overall. This percentage will increase in 2023 as the sport's non-RSN business had a strong year as fans embraced rule changes that shortened game times and introduced more action, leading to record ticket and sponsorship revenue. It should rise.
NBA
The NBA, like the NHL and MLB, operated for many years, with gate receipts driving business. NBA Finals games were still shown on tape delay until his 1981 season. But the NBA is starting to resemble the NFL's business model, with larger and larger checks being paid each year from league offices. The move is reflected in an increase in the floor price for NBA team acquisitions, which is now $2.7 billion, more than double what it was three years ago.
Median revenue comes primarily from broadcast deals with ESPN and TNT, which accounted for 44% of the $10.9 billion in total revenue generated by the 30 teams during the 2022-23 season. Most teams expect the next TV deal to include a 100% to 150% increase from the current $2.6 billion per year. That would further increase the NBA's shared revenue.
Ticket sales and suites account for 26% of the league's revenue, with $3,000 courtside seats in New York and Los Angeles accounting for that revenue.
NHL
The NFL, NBA, NHL, and MLB teams all generate similar amounts of money from tickets and suites, ranging from $2.9 billion to $3.3 billion for the four leagues, but that total amount comes from television contracts. represents a much larger portion of the small NHL's revenue. compared to the other three leagues.
The NHL remains a gate-driven league, with this category accounting for 44% of revenue for the 2022-23 season. The long playoff run can be a bonanza for teams, which can keep 65% of ticket revenue in the postseason and typically increase prices with each round. Almost all ticket revenue for the NFL playoffs goes to the league, but MLB teams send the majority of their revenue to the league until after the first three or four games of the series.
NHL teams benefit from operating arenas by generating revenue from league events that are included in the “Other” category in the pie chart above. The Los Angeles Kings own and operate his Crypto.com Arena through AEG. They built four new courtside bunker suites in the arena ahead of this season, all but one of which were purchased under a long-term contract worth $5 million annually. Suite owners have access to countless concerts and premium events held at the arena, including the Grammy Awards and his 2028 Summer Olympics.
MLS
Last year, Major League Soccer teams received rocket fuel with the addition of Lionel Messi, increasing total revenue by 27% to $2 billion. Seating (39%) and sponsorship (29%) make up the majority of the league's revenue, and the clubs that operate the buildings also benefit from hosting non-MLS events.
The league's economic landscape will undergo further transformation in 2023, with the loss of local TV rights due to Apple's entry as the league's broadcast partner. Only a few teams, such as LAFC, had lucrative local television deals. Most teams were forced to pay production costs with almost no broadcast rights fees, resulting in a net loss on the broadcast side.
On the league side, it generates revenue from Soccer United Marketing (SUM) as well as broadcasting and sponsorship deals. These revenues are identified within the revenue categories in the center of the pie chart. The reality is that teams don't actually receive annual checks from MLS. Because MLS's unitary organizational structure means that player contracts are “owned” and paid by the league. The costs of player and league operations exceed central revenue, and teams are required to fund these costs through annual evaluations.
global football
The 20 most profitable soccer clubs are all based in Europe. According to Deloitte, it generated a total of $11.2 billion in revenue in the 2022-23 season. Many European teams are considering investing in stadiums to catch up with the American venue model. Tottenham opened their $1.3 billion stadium in 2019, and Real Madrid are finishing up their own major renovation of the Santiago Bernabéu. Chelsea, Barcelona, Inter Milan, AC Milan and Manchester United are among the clubs considering major stadium renovations or new buildings.
The team derives most of its revenue from commercials (42%) and broadcasts (40%), with merchandise sales included in the commercial portion. Bayern Munich had the highest commercial revenue last year, with $448 million based on current exchange rates. Manchester United came first in terms of broadcast revenue with $368 million, while Barcelona ($178 million) came first in match-day revenue.
