The Most Valuable Sports Franchises and How Their Worth Is Calculated

Sports franchises are among the most valuable assets in the business world, with some teams worth billions of dollars. Their value is driven by revenue streams, market dynamics, and brand strength, making them attractive investments. As media rights deals expand and global fan engagement grows, franchise valuations continue to rise.

Understanding what makes these teams so valuable requires examining how their worth is calculated and the factors that influence it.

Methods Used to Calculate Franchise Worth

Valuing a sports franchise involves analyzing financial performance, assets, and market conditions. One widely used method is the income approach, which estimates worth based on expected future earnings. This involves calculating EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), a key profitability metric. Analysts apply a multiple to EBITDA, often based on recent franchise sales, to estimate overall value. If a team generates $200 million in EBITDA and similar franchises have sold for 10 times EBITDA, the estimated valuation would be $2 billion.

Another approach is the market-based method, which compares recent sales of similar franchises. This method considers league popularity, historical performance, and ownership stability. If a comparable team in the same league sold for a certain price, it provides a benchmark for valuing another franchise. However, unique circumstances, such as a forced sale or an exceptionally high bid, can complicate this method.

The asset-based approach focuses on tangible and intangible assets, including stadium ownership, training facilities, and intellectual property like trademarks and branding. A team with a state-of-the-art arena in a prime location may have a higher valuation than one leasing an older facility. Brand value also plays a role, as globally recognized teams command higher sponsorship and licensing deals.

Revenue Streams in Pro Sports

A sports franchise’s financial strength depends on its ability to generate revenue from multiple sources. These income streams shape a team’s valuation and profitability. While some revenue sources are stable, others fluctuate based on team performance, market conditions, and industry trends.

Ticket Sales

Selling tickets is one of the most direct revenue sources. Ticket revenue depends on stadium capacity, seat pricing, and fan demand. Teams in larger markets or with strong fan loyalty can charge higher prices, increasing earnings.

Dynamic pricing models, where ticket prices fluctuate based on demand, have become common. A rivalry game or playoff matchup may see significantly higher prices than a regular-season contest against a weaker opponent. Season tickets provide upfront cash flow and financial stability.

Luxury suites and premium seating contribute significantly to ticket revenue. These high-end options, often purchased by corporations, can cost hundreds of thousands of dollars per season. Unlike general ticket sales, which may be subject to revenue-sharing agreements, premium seating revenue often remains with the team.

Broadcast Rights

Television and streaming deals are among the most lucrative revenue sources for professional sports teams. Leagues negotiate national broadcast contracts, distributing revenue among teams, while individual franchises may also secure local media deals. The value of these agreements depends on audience size, market reach, and competition among networks.

For example, the NFL’s media rights deal, signed in 2021, is worth over $100 billion over 11 years, with revenue distributed among all 32 teams. This ensures financial stability even for teams with lower ticket sales. In contrast, Major League Baseball teams rely more on regional sports networks (RSNs) for local broadcast deals, which can vary significantly in value.

Streaming services have also entered the market, increasing competition and driving up rights fees. Platforms like Amazon Prime and Apple TV+ have secured exclusive broadcasting rights for certain games. As consumer preferences shift toward digital viewing, teams and leagues continue to explore new ways to monetize content, including direct-to-consumer subscription models.

Sponsorships

Corporate sponsorships generate substantial revenue through partnerships with brands seeking exposure. These deals include naming rights for stadiums, jersey sponsorships, and advertising placements within arenas. The value of sponsorship agreements depends on a team’s market size, fan engagement, and brand strength.

Stadium naming rights are particularly lucrative. SoFi Stadium, home to the Los Angeles Rams and Chargers, secured a 20-year, $625 million naming rights deal with SoFi, a financial services company. Similarly, NBA teams have introduced jersey sponsorships, selling small patches on uniforms to corporate partners, generating millions annually.

Sponsorship agreements often include performance-based incentives. A company may pay a base fee but offer additional bonuses if the team reaches the playoffs or wins a championship. This structure aligns the interests of both parties, ensuring that sponsors benefit from increased visibility when a team performs well.

Merchandising

Selling team-branded merchandise, such as jerseys, hats, and memorabilia, is another key revenue stream. Merchandise sales are influenced by team success, player popularity, and global fan engagement. A star player joining a team can lead to a surge in jersey sales, as seen when Lionel Messi signed with Inter Miami in 2023.

Teams typically share a portion of merchandise revenue with their league. The NFL operates a centralized licensing model, where all teams contribute to and receive a share of total merchandise sales. In contrast, some European soccer clubs retain a larger share of their own merchandise revenue, particularly if they manage their own retail operations.

E-commerce has expanded merchandising opportunities, allowing teams to sell directly to fans worldwide. Online platforms and social media marketing have made it easier for franchises to reach international audiences. Limited-edition items and collaborations with fashion brands have also become popular, creating additional revenue opportunities.

Market Size and Regional Economics

A sports franchise’s financial potential is heavily influenced by the size and economic strength of its market. Larger metropolitan areas provide access to a bigger fan base, greater corporate sponsorship opportunities, and higher local media revenues. Teams in cities like New York, Los Angeles, and London benefit from a dense population with high disposable income, allowing them to command premium pricing for everything from tickets to advertising partnerships. Smaller markets, while still capable of supporting successful franchises, often face limitations due to fewer businesses willing to invest in sponsorships and a more constrained consumer base.

Beyond population size, regional economic conditions shape a team’s financial outlook. Cities with strong job markets and rising household incomes create an environment where fans are more willing to spend on sports-related entertainment. Conversely, teams in regions with economic stagnation or declining populations may struggle with attendance and local corporate investment. For example, franchises in cities experiencing major industry downturns—such as Detroit during its automotive crisis—have faced financial challenges that impact long-term stability.

Government policies and public funding also affect franchise valuations. Many teams receive subsidies for stadium construction or tax incentives that reduce operational costs. A city willing to invest in modern sports infrastructure can make a franchise more attractive to potential buyers and investors. The financing of Allegiant Stadium in Las Vegas, which received $750 million in public funding, helped attract the Raiders from Oakland, demonstrating how local government support can reshape a team’s financial landscape.