The Denver Broncos had a fourth quarter. The photo was taken by the man.
A new benchmark for the sale of a sports team has been set by the purchase of the Denver Broncos. I wrote on Monday that Walton was going to buy the football team. The sale has to be approved by at least 24 of the league's owners.
The deal is 45% more than the $3.2 billion Joe Tsai paid for the Brooklyn Nets in 2019. The new ownership group includes Rob's daughter, Carrie Walton Penner, and her husband, Greg Penner, who is the chairman of Walmart.
Multiples are rising and prices are going up.
The price tag is 25% more expensive than Forbes valued the Broncos in August 2021.
When there are no other individuals with similar wealth in the bidding, the price of a team is not much of a concern. Josh Harris, the richest of the other rivals for team ownership, has a net worth of just over one hundred million dollars. According to a source familiar with the negotiations, there was no other bid that had secured financing that high. The other bids were headed by a billionaire and a mortgage mogul.
The same thing happened when Steve Ballmer bought the Los Angeles Clippers for $2 billion. I remember being on a sports panel at a conference hosted by Gabelli Funds shortly after that deal where the attorney who had represented the seller told the audience that Ballmer didn't even look at the books of the NBA team but simply asked, "What do I have to pay?" There were no other offers that were close to Ballmer's offer.
The second point is that the multiples being paid for sports teams continues to climb, in part because there is an expectation that revenue and profits will keep increasing, and also because the value of sports teams aren't correlated with the economy and stock market.
The sale prices of the football teams have increased more than five-fold over the past two decades, compared to a three-fold increase for the stock market.
It has been two decades of appreciation.
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