The world’s richest people are valuing trophy sports properties at record levels. Credit the massive wealth created in the stock market over the last five years, exploding TV rights fees and the limited number of teams available.
The value of professional sports franchises has been turned upside down with the potential sale of the Los Angeles Clippers to former Microsoft head Steve Ballmer for $2 billion. The deal, which is hung up in the courts, values the Clippers at 15 times revenue compared to the previous NBA record of five times revenue for the sales of the Milwaukee Bucks in March and Washington Wizards in 2010. The big market Philadelphia 76ers sold for just 2.5 times revenue in 2011.
It is still to be determined how big an outlier the Clippers’ sale is. The next two highest bids after Ballmer were for $1.6 billion and $1.2 billion, and multiple parties bailed out of the process thinking $1.2 billion was too high, so there is a big gap in what experts think (Forbes valued the team at $575 million in January after consulting with sports bankers). But the Clippers proved without a doubt the value of big market sports teams in the U.S. is higher than ever.
As expensive as prime U.S. sports properties have become, they can’t match the top European soccer clubs when it comes to value and global reach. The three most valuable sports teams in the world play the non-American brand of football. Spain’s Real Madrid, worth $3.44 billion, leads the way for the second straight year, a notch ahead of fellow Spanish soccer power, Barcelona, which is worth $3.2 billion. Manchester United rounds out the top three with a value of $2.81 billion.
Real Madrid has made it to the Champions League semifinals for four consecutive years and took home the crown this year, defeating Atletico Madrid 4-1 for its record tenth Champions League title. The win means a payout of $78 million versus the $62 million Real earned last season for its semifinal finish. Real Madrid, which features global icon and reigning player of the year Cristiano Ronaldo on the pitch, generates more revenue than any sports team in the world ($675 million for the 2012-13 season). Commercial revenue is padded by a $41 million-a-year kit deal with Adidas and a shirt sponsorship with Emirates worth $39 million annually. Madrid is planning a $540 million renovation to its stadium, Santiago Bernabeu, which is expected to be completed in 2017.
Barcelona has won six La Liga titles in the past decade and is led by Lionel Messi and Neymar, who are two of the highest-paid players in the sport. Barcelona, like Real Madrid, is owned by its club members called socios. The members approved an $800 million renovation of the team’s Nou Camp stadium in April. The project will add a roof to the stadium, as well as a development around the venue. The plan calls for more than 5,000 additional seats, bringing capacity to 105,000. The project will commence in 2017 and be completed in 2021. Barcelona told Forbes earlier this year that the Nike store at Nou Camp stadium had the highest sales of any Nike store in the world.
Manchester United finished seventh this season in the English Premier League. It marked the club’s worst season since the launch of the EPL in 1992. United sacked its manager David Moyes in April after only one season. Moyes had replaced the legendary Alex Ferguson, who led United for nearly three decades. Companies continue to flock to United despite the troubles on the field. Adidas inked the team to a 10-year, $1.3 billion kit deal this month that is more than double the next biggest pact in sports. General Motor’s seven-year, $559 million shirt sponsorship deal with United for its Chevrolet brand kicks off next season. Wall Street has pushed up the enterprise value of the publicly-traded United to a recent $3.6 billion from $2.8 billion in May.
Social media is not an exact science for popularity, but the contrast between elite soccer clubs and top American teams is vast. Barcelona (69 million), Real (67 million) and United (53 million) have the three biggest Facebook followings among sports teams. The top eight are all soccer clubs before the Los Angeles Lakers break the string with 21 million fans. The New York Yankees are the top non-soccer/NBA team with 8 million fans. The NFL’s 32 teams have a combined Facebook following of 75 million people or barely more than Barcelona by itself. NFL and MLB teams play and do business on a national scale, while Europe’s top soccer clubs with fans worldwide can tap every corner of the globe for deals.
Forbes has valued teams in the major sports leagues since 1998. Our team values are enterprise values (equity plus debt) based on current venue deals (unless a new venue is pending). The top 50 list is based on our published valuations for the NFL, NHL, NBA, MLB, Nascar and soccer over the past year, which were all before the proposed Clippers sale. The average team in the top 50 is worth $1.34 billion, up 8% over last year. There are 38 teams worth $1 billion versus 33 last year. There weren’t any teams worth $2 billion three years ago; now there are six. Minimum entry for the top 50 is $856 million (AC Milan) compared to $586 million four years ago.
The Yankees are the most valuable non-soccer team in the world with a worth of $2.5 billion. TV is driving the value of the Bronx Bombers. Fox exercised its option to increase its ownership of the Yankees’ regional sports network, YES, to 80% earlier this year (Yankees Global Enterprises, which is majority owned by the Steinbrenner family retains 20%). As part of the deal, the programming rights fee for the Yankees starts at $105 million (including the amortized value of a $400 million upfront payment) and will hit $350 million a year by 2042.
Soccer clubs dominate the top of the list, but football teams make up the bulk of the top 50 with 30 entries (only the Oakland Raiders and Jacksonville Jaguars failed to make the cut). Leading the way is the Dallas Cowboys, who rank fifth overall worth $2.3 billion. The Cowboys have been the NFL’s most valuable team since 2007 thanks to the league’s highest sponsorship and premium seating revenues—a combined $220 million. The ‘Boys revenue got a boost last summer when owner Jerry Jones inked a 25-year stadium naming rights deal with AT&T worth $500 million. The club has the top operating income in sports at $251 million for the 2012 season.
The biggest mover in the top 10 is another global soccer power, Bayern Munich. It jumped five spots to No. 7 with a value of $1.85 billion after claiming its fifth Champions League title in 2013. Commercial revenue hit a record $308 million, second highest in the world behind Paris Saint-Germain, according to Deloitte. Bayern Munich has the richest shirt agreement ($40 million annually with Deutsche Telekom ) and kit deal ($38 million a year with Adidas) in the German Bundesliga.
The 20 non-NFL teams in the top 50 include eight soccer and six baseball clubs, as well as four from the NBA led by the New York Knicks at No. 13, with a valuation of $1.4 billion. Rounding out the top 50 are a Formula 1 team (No. 21 Ferrari at $1.2 billion) and the NHL’s most valuable franchise, the Toronto Maple Leafs, who rank 26th at $1.15 billion. New additions include: St. Louis Rams and Boston Celtics who tied for No. 45 at $875 million, as well as No. 49 Manchester City at $863 million. The Raiders, New York Mets and Formula 1’s McLaren dropped out of the top 50.
This article originally appeared in Forbes