The valuations of sports franchises and leagues are particularly complicated, given the infrequency of transactions and the limited supply of opportunities to enter professional leagues. While traditional valuation analysis typically examines comparables in the same market, this is analysis is complicated for sports franchises, as leagues control the location and proximity of franchises and franchise financial structures are generally confidential.

Moreover, the variances between professional leagues differ with regard to franchise availability, location, facility contracts and ownership, majority or minority stakes, player contracts, and a number of variables that are frequently in flux.  The limited number of franchise transactions and the variances in team operating structures and assets make it especially important to understand and analyze these differentiating factors when valuing any of a team’s assets. Further complicating this is the fact that sportsmen owners, who are not necessarily profit maximizers, can skew the underlying economic value of the assets.

One asset commonly included in team valuations is the facility in which the team plays and operates.  Whether or not the team owns or leases the facility, the high costs of these agreements and the duration of the commitment make these venues an increasingly important factor in a team’s financial success. Stadium leases have become core assets of professional sports franchises, and the financing of the construction of state-of-the-art facilities have become a common factor in the negotiations between teams and the communities in which they are located.

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