California is No. 1 in the nation when it comes to the business of professional sports.
My trusty spreadsheet found the 15 pro teams in the four biggest leagues that call the Golden State home are worth a combined $43 billion. That’s more franchises and more value than any other state, according to a compilation of valuations by Forbes magazine.
Adding to their affluence, California teams are the reigning champs in football and basketball and winner of 2020’s baseball crown. The road to a league title enhances team values and brings cash to local economies.
But the story isn’t simply about packed playoff games hosted across California.
Pro teams also host high-profile events such as Major League Baseball’s All-Star Game festivities, which take place this weekend in Los Angeles. Basketball’s all-star game was hosted in California in 2018 and hockey’s version was played here in 2017 and 2019.
In February, Los Angeles hosted America’s great sports holiday — the Super Bowl. The big game was last hosted in California in 2016 up in Santa Clara.
All of this adds up to victories on another scorecard — the money. Gobs of it.
The combined wealth of California’s 15 pro teams equals one-sixth of the total value of all 124 franchises in the four pro sports. On Wall Street, that $43 billion would buy either the O’Reilly auto-parts chain or Valero’s gasoline business or Exelon, an East Coast utility.
At $2.9 billion per franchise, the average California pro team is one-third more valuable than the typical pro franchise.
It’s all in the flow
California’s sports riches stem from $4.1 billion in annual team revenues — $274 million per team, according to Forbes.
The nation’s largest population and the state’s media markets fuel California pro teams to premium valuations. Their winning traditions don’t hurt either. The teams are priced an average 10.5 times sales vs. nine for all pro teams, says the trusty spreadsheet.
Yes, California fans may be fickle, but they do show up to ballparks and arenas. At least 15 million people attended a game in the past season, according to a compilation of ESPN attendance stats. That’s 1 million fans per team or 18% above the average team’s crowds.
California fans also will pay up for games. A typical family spends $457 on tickets, food and souvenirs to root for their team, according to the Fan Cost Index — 5% more than the pro-sport average.
All this money-making begs a big question: Why do cities across the nation frequently offer wealthy team owners handouts to create or enhance the palaces in which teams show off their skills?
In California, we have the scandal-tainted negotiations in Anaheim surrounding baseball’s Angel Stadium. There’s also a protracted fight over who should pay what to keep the A’s baseball team in Oakland. San Diego stood its monetary ground and lost football’s Chargers to Los Angeles.
At least the city of St. Louis won $790 million from pro football to help cover the city’s damages tied to the departure of the Rams to Los Angeles.
Note that California’s roster of pro teams would be one franchise bigger if football’s Raiders — worth $3.4 billion — didn’t leave Oakland in 2020 for Las Vegas, thanks to a $750 million taxpayer gift to build a shiny black stadium.
Big business
The 124 teams in North America’s four big pro leagues — football, basketball, baseball and hockey — are worth a combined $276 billion, my spreadsheet says.
That’s up $35 billion or 14% from the previous valuation 12 months earlier. That bump is largely tied to the industry’s recovery from pandemic-era business limitations.
If all these pro teams were one company on Wall Street, it would rank in the top 25 of the nation’s most valuable publicly held firms. This market worth approximates blue-chip giants such as Pfizer, Coca Cola or Chevron.
The combined revenues for the 124 teams is $31 billion yearly — basically, a quarter-billion per team. That combined sales take is on par with revenues collected by Netflix or homebuilder D.R. Horton.
Pro sports’ cash flow is linked to the 105 million fans who attended games last season. That’s 850,000 tickets sold per franchise — with a family of four spending $435 for tickets, food and souvenirs, according to the Fan Cost Index.
Footing the bill
Drawing fans to the game in person is only one part of the profit pie for pro sports owners. Let’s talk TV.
The reason pro football franchises are easily the most valuable sports teams is the huge amounts broadcasters are willing to pay for National Football League content.
It’s all about eyeballs. NFL regular-season games draw roughly 17 million viewers on TV — that’s 10 times the audience of pro basketball, 15 times baseball and 25 times hockey.
The power of that audience translates to 32 NFL teams worth $111 billion, by Forbes math, or $3.5 billion per franchise. And NFL values rose $14 billion or 14% in a year.
Perhaps most stunningly, football represents 40% of pro sports’ total value. Look around California. The NFL has the Rams (worth $4.8 billion, eighth-most valuable pro team), San Francisco 49ers ($4.2 billion, No. 10), and Chargers ($2.9 billion, No. 35).
The NFL’s overall bounty is driven by revenues totaling $12.2 billion yearly — or $381 million per team. Football equals 40% of all pro teams’ sales.
But because football teams only play eight or nine regular-season home games — compared with 41 for basketball and hockey and 81 for baseball — in-person fandom is proportionally modest. The league draws 18.3 million in-person fans or 571,660 per team — 33% below the pro sports average.
But if you go, be prepared for a pricey day. The Fan Cost Index shows NFL games cost a family $568 — 31% more than pro sports fans typically pay.
Market basket
The global appeal of the National Basketball Association helps make it the second-most valuable pro league.
Its 30 teams are worth $74 billion (per-team average: $2.5 billion) and that’s up $8.3 billion or 13% in a year. In California, that’s the Golden State Warriors (worth $5.6 billion, No. 4 nationally), L.A. Lakers ($5.5 billion, No. 5), L.A. Clippers ($3.3 billion, No. 29), and Sacramento Kings ($2 billion, No. 57).
Team revenues total $6.4 billion yearly — $214 million per team. But valuations are pro sport’s highest — 11.6 times sales vs. a 9 industry average.
NBA crowds total 21 million or 695,000 per team — 18% below the industry norm. The cost of basketball games for fans is middle-of-the pack — $444 for the typical family, 2% more than the 124-team average.
Past its time?
The so-called “American Pastime” is third of four in many pro sports metrics.
The value of the 30 Major League Baseball teams adds up to $62 billion (average: $2.1 billion) — up $5.1 billion or 9% in a year.
In California, it’s the L.A. Dodgers (worth $4.1 billion, No. 11 of all pro teams), San Francisco Giants ($3.5 billion, No. 21), Angels ($2.2 billion, No. 53), San Diego Padres ($1.6 billion, No. 78), and Oakland Athletics ($1.2 billion, No. 95).
Baseball does rake in revenues, with a total of $9.6 billion yearly. It equals $319 million per team and 31% of all pro sports sales.
But team valuations are relatively low — 6.5 times sales vs. 9 for all pro teams. Why? Lofty costs due to an extremely long season and high player expenses.
So why are baseball teams often begging for stadium aid?
It has lots of seats to fill. The sport’s lengthy schedules draw 45 million fans or 43% of all pro attendance. The 1.5 million average per baseball per team is 78% above the industry norm.
But baseball is also a consumer “bargain” with a typical family spending $256 per event — 41% less than fans typically pay.
Iced over
The National Hockey League is the major league’s little sibling.
Its 32 teams are collectively worth $28 billion (or a $900,000 average). That’s up $7.1 billion, or 31%, in a year because the sport is heavily dependent on packing fans into an indoor arena. The pandemic made that nearly impossible.
California hockey values run from the L.A. Kings ($1 billion, No. 99 of all pro teams) to the San Jose Sharks ($625 million, No. 115) to the Anaheim Ducks ($620 million, No. 116), by Forbes math.
Team revenues total $2.3 billion yearly — $76 million per team — only 8% of industry sales. But NHL franchises draw above-par values, going for 11.5 times sales vs. 9 for all pro teams.
Ice hockey’s small but devoted fan base fills 20 million seats. The NHL’s 646,000 per team average, however, is 24% below the industry norm.
Yet like many niche products, it’s a pricey product. A typical family spends $463 a game — 6% more than all fans pay.
Why the handouts?
The average pro franchise is worth $2.2 billion.
And that’s on the upswing. Football’s Denver Broncos are selling for $4.7 billion — twice the previous sports franchise record price paid ($2.35 billion) for basketball’s Brooklyn Nets in 2019.
So, it’s bemusing to hear team owners sometimes speak as if they’re impoverished.
Meanwhile, nasty family fights break out over ownership of these sporting assets. For example, internal battles are brewing for control of the Chargers and baseball’s Baltimore Orioles.
You know there is serious money in these businesses. And to be fair, not every owner seeks taxpayer dollars to support their athletic business ventures.
In California, new homes for the Rams and Chargers in Inglewood (SoFi Stadium with a $5 billion-plus price tag) and the Warriors in San Francisco (Chase Center with a $1 billion tab) were privately financed. That largesse is proof of the financial muscle of team owners and their athletic industry endeavors.
Bottom line: Any industry worth a quarter-trillion bucks should not be begging cities for financial help to create their “factories.”
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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July 16, 2022 at 10:11PM
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