Suraj K. Gupta is President & CEO of Rogue Insight Capital, an investment firm focused on supporting diversity, innovation and social impact
The era of unprecedented growth in sports continues, and professional sports teams’ valuations are skyrocketing. In the past year alone, the Buss family sold their majority share in the Los Angeles Lakers, which put the franchise’s valuation at about $10 billion; the Boston Celtics sold at a control price worth up to $7.3 billion and the Portland Trailblazers sold for $4.25 billion. Just months prior, these teams’ valuations were much lower. For instance, Forbes put the Lakers’ valuation at $7.1 billion in October 2024.
This growth is not contained to the NBA. New York Giants great Eli Manning was ready to buy a stake in his former club, but when the valuation was near $10 billion, Manning passed partially because it was “too expensive.” The Miami Dolphins sold a stake at a $8.1 billion valuation, the New England Patriots at $9 billion and the list goes on.
My company has been investing in professional sports teams for years, and our portfolio includes teams across Formula 1, European soccer, the NBA and the NFL. In April 2024, I wrote an article discussing whether sports teams are overvalued. My conclusion was that strong market teams in the right leagues with high upside on media contracts have significant runway for further growth. This has indeed played out, with NFL, NBA, European Soccer and Formula 1 teams transacting at soaring valuations.
What is driving this growth, and can this trend continue? Having considered nearly every major transaction in sports over the past several years, I have noticed two aspects fueling growth and two critical risks for the future that investors need to pay attention to.
Growth Drivers
Rights Out, And Away We Go
Media rights are the bread and butter of sports leagues. In 2021, the NBA media’s average annual value (AAV) was $2.6 billion, and some projected a 2025 increase to around $4 billion (paywall). The NBA was cumulatively worth roughly $66 billion back then. Fast forward to 2025, and the NBA signed an 11-year, $76 billion media deal, with NBA teams’ worth doubling to roughly $130 billion since (per the aforementioned Forbes article).
We have seen media-fueled valuation growth across many leagues. Formula 1 saw a 15 to 18 times media rights increase via its 2022 ESPN deal, and Major League Soccer’s (MLS) 10-year, $2.5 billion 2022 Apple TV deal was signed at a significant premium to its previous $90 million annual contract. Team valuations have correspondingly grown over the past six years, as the average Formula 1 team’s value increased from $500 million to $2.3 billion (paywall), and the average MLS team increased from $313 million to $690 million.
The NFL has seen growth as well, particularly with the league approving private equity ownership in teams. Although the current NFL media deal runs until 2033, the league has an opt-out clause in 2029, which some say the NFL will likely leverage. Valuations will likely continue to fluctuate based on the perceived value of this renewal.
The Play-Caller Premium
As mentioned above, NBA change-of-control deals have traded at a premium to market value. Is this sustainable, or is the greater fool theory at work? My view is that in sports investing, buying majority stakes is a very different ballgame than buying minority stakes. There is value in being a control owner, and a corresponding premium goes along with it. Minority owners are mostly along for the ride, but majority owners decide on team direction, competitiveness, personnel and operations. Case in point: Mark Cuban sold most of his majority stake in the Dallas Mavericks for $3.5 billion in 2023, but he retained control over “basketball operations,” effectively retaining this premium in the sale.
One strategy I see investors use in sports is to target minority shares, which often trade at a discount, in teams that may have a control sale down the line, which often exit at a significant premium. Conversely, when minority investors tag-along in purchasing equity during a control sale, they are often paying a control premium for a minority stake without decision-making authority. This often comes with a very long holding period, as control owners tend to own teams for decades.
Risks To Consider
Field Of Dreams
While big-league sports can be difficult to access, investors need to account for the risks of chasing deals in smaller or more obscure leagues. Value is derived from where consumers spend their time and money, and fans typically prioritize quality and history. Smaller leagues are not necessarily primed for success, and competitor leagues often face difficult uphill battles. For example, the Super League took on UEFA before collapsing after fan “revolt,” and the PGA-LIV merger continues to have viability questions.
Fans want the best-of-the-best and will follow the players and teams they grew up watching. While a select few may gravitate toward smaller, niche leagues, it is incredibly difficult to swim against the current of talent and history.
Box, Please, Box
As discussed in my previous article (linked above), massive tailwinds have come from big tech, whose value proposition for consumers is vastly different than legacy media. Apple, Amazon and Netflix have paid record prices for media rights as they monetize consumers’ integration into their ecosystems, and legacy media may not have the budget to fight back.
But what happens if tech companies’ budgets were to dwindle? Many big tech firms are spending aggressively overall, with four companies spending over $300 billion on AI in 2025. Some have raised questions about the sustainability of this spending. If there were a significant correction, this could lead to a reduction in ancillary expenditures.
Through the Great Recession in 2009, many car manufacturers, including Toyota, Honda and BMW, exited Formula 1. Their industry was hard-hit, and they prioritized novelty-spending cuts to focus on their core businesses. BMW sold Sauber, now worth $1.2 billion, while Honda’s former team was eventually taken over by Mercedes and is now worth $3.8 billion. This shows that even if sports demand and fundamentals remain strong, public corporations tend to be reactive to market pressure in times of stress, and a correction could reduce the tailwinds behind media contracts in the future.
Final Score
Although the sports market seems overheated, the fundamentals remain sound if you pick the right teams in the right situations. Look for fair valuations in strong markets with a robust floor on demand and in leagues where there are long-term revenue upticks not yet priced in. I am wary of new, upstart leagues unless they have a clear line of sight to significant, sustainable revenues.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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