What if American Sports Teams were Publicly-Traded?

The world of sports is getting more and more expensive as record sales seem to be made every few months. But are they worth it?

In the past few years, sports teams have commanded eye-popping valuations when sold to new owners. The Washington Commanders’ sale in 2023 broke records with a $6.05 billion price tag. That same year, famous NBA owners Mark Cuban and Michael Jordan sold their precious Dallas Mavericks and Charlotte Hornets for around $3.5 billion. This year, the Boston Celtics sold for a record-breaking $6.1 billion, only to be promptly overtaken by the $10 billion sale of the Los Angeles Lakers. New owners are paying mountainous sums to be the proud owners of some of the most popular businesses in the world, but are these operations worth this amount of money?

You know who made more money than Super Bowl LIX this past NFL season? The Dallas Cowboys. That’s right. “America’s Team”, a team that didn’t even make the NFL playoffs, earned about $1.2 billion in revenues last season, compared to “just” $800 million earned by potentially the biggest advertising event on the planet. The Cowboys turned an operating profit of $564 million, an operating margin of around 47%. That beats Apple’s 46.6% gross margin over the last 12 months. In other words, the Cowboys trump one of the biggest brands in the world in terms of profitability, and it’s not even close. By the way, Jerry Jones bought the franchise for the astronomical sum of $140 million in 1989.

The Cowboys aren’t the only NFL team earning huge pools of cash, though they are the highest-earning team in all of sports. The NFL’s current broadcasting deals pay a total of more than $100 billion to the league and its franchises over 12 years. That’s on par with the GDP of countries like Croatia and Serbia, home to almost 4 million and over 6 million people, respectively. The Los Angeles Rams are the second-most profitable team in the league, with $756 million in revenue and $286 million in operating income. Not too shabby, especially considering the team was bought for $750 million back in 2010.

The NFL is so profitable that you’d have to be one of the worst money managers in the world to lose money. Not a single team fails to turn a profit as of the latest reports, and the least profitable team, the Detroit Lions, earned $56 million in operating income this past season. On $501 million in sales, that’s a roughly 11% margin. Not amazing for an NFL team, but it’s still way better than the 2.4% operating margin earned by the majority owner’s other business, the Ford Motor Company. The Lions also boast a 5% debt-to-value ratio, way better than the 34% ratio achieved by Ford this past year.

The NFL is a great place to be for a sports team owner. Valuations are always increasing significantly. Profits seem to be sky-high no matter how poorly the business is managed. It’s basically like a bunch of established healthcare or technology companies competing for a prize other than being the most valuable. However, the rest of sports landscape is not so pretty. Most of the other major sports leagues have multiple teams that have lost money in the past few years. One major example would be the teams that play America’s favorite pasttime: baseball.

While this subject does not seem to be as interesting to fans as the finances of the NFL, it is important to note that much of the league is losing money in recent years. As far as I can tell, 11 MLB teams posted an operating loss in 2024. That represents almost 40% of the 30 teams in the league. Many fans could be shocked by such news, but it is a fact that has been long in the making. In the 1970s and early 1980s, the MLB World Series was watched by over 40 million, sometimes over 50 million people. Today, that number hovers around 15 and 16 million on average. This drop in ratings has pummeled the standing of the league.

To put things into perspective, the average viewership of the last World Series, the one in 2024, was 15.8 million. The Kentucky Derby drew in 17.7 million viewers this year. Major horse racing events have become more popular than baseball’s biggest event despite the expected broader appeal of baseball. The Yankees, despite making the World Series in 2024 and boasting an $8.2 billion valuation, took an operating loss of $57 million for the year. Their rivals in the same city? Forbes estimated that the Mets lost close to $270 million in 2024. If the NFL is like Nvidia right now, the MLB is closer to Boeing.

Of course, not every MLB team has been unprofitable in recent years. The Boston Red Sox, despite being worth over $3 billion less than the Yankees, turned an operating profit of $120 million. In stock terminology, that would be a price-to-earnings ratio of roughly 40. With modern stock valuations seeming to be sky-high, this is not a bad valuation for an entity that has an oligopoly on sports entertainment in its city (along with the Patriots, Celtics, and Bruins). This is still less than the price-to-earnings ratio of less than 20 boasted by the Dallas Cowboys.

The NBA has seemingly fared better than the MLB in recent years, at least in terms of profitability. The Golden State Warriors, the most valuable team in the league before the massive Lakers deal, earned $142 million in operating income during the last reported period. At a valuation of $8.8 billion, that’s a price-to-earnings ratio of roughly 62. That’s higher than the price-to-earnings ratio of Nvidia (53), the most valuable company in the world by market cap. With the NBA, the problem is the skyrocketing salaries earned by the players in recent years.

The reigning champions, the Oklahoma City Thunder, recently dished out $822 million to their three biggest stars, including a record-breaking $285 million contract with Shai Gilgeous-Alexander. That’s double the net worth of the largest shareholder of the team, Clay Bennett. NBA teams are increasingly feeling pressure from players’ salaries rising, and the impact can be seen in the income statements of quite a few teams. For example, the Los Angeles Clippers lost close to $100 million from operations the last time they reported figures.

Not all NBA teams are inferior to their NFL rivals in terms of operating income. Interestingly enough, both the Hawks and the Falcons earned $94 million despite the Hawks having $232 million less in revenue and a valuation that is $1.4 billion lower than that of their football counterpart. Hilariously, both teams also supposedly earned an average of $29 in revenue per fan. Overall, however, the NFL is a more valuable league to be in than the NBA or the MLB, and most of the numbers back this up.

Of course, almost anyone with enough money to purchase a sports team will do it. They are virtual monopolies, at least for their sports, in the cities they reside. They always seem to be Next week, I will begin diving deeper into the finances of specific teams, their rivals, and maybe even their stadium sponsors. In general, the NFL seems to be the best place to invest for any potential sports teams owners. They are like established tech giants with monopolies on the most popular sport in the country in their respective cities. However, every team is different just like how every stock is different. Thus, we shall begin to examine different sports teams to see who really deserves their valuation and who may not.