Sports fans across all five major professional North American leagues have started to notice a trend: Franchises are being sold for more than ever, more frequently than ever.
The scale and scope of these sales is most evident in the NBA, which has seen a handful of high-profile organizations auction off majority stakes over the past couple of years. But NFL franchises are starting to travel in the same direction, with the New York Giants reportedly looking to sell a limited stake in the team, preferably at a valuation of $10 billion. We also just saw the Tampa Bay Rays get sold for $1.9 billion in Major League Baseball. Turnover has not hit the NHL at the same rate, but it’s starting to reach that level. The WNBA has seen franchise valuations skyrocket as well.
Part of the reason sales frequency has risen is self-explanatory. Franchise valuations have skyrocketed in the age of lucrative media rights deals and at a time when the proliferation of widely used sports betting apps have opened new revenue streams while inviting even more interest in live sports.
Still, this does not explain everything at play. In particular, it overlooks one major factor that’s driving both the value of pro sports teams and the frequency with which they are sold to new heights: Billionaires are rolling the dice on the Millennial generation keeping the business of pro sports as lucrative as it is now.
This is the Reason Why So Many Sports Franchises are Being Sold
Before getting into how Millennials are impacting the landscape of pro sports valuations, let’s first look into the frequency at which these franchises are getting auctioned off. Of course, when you weigh the Millennial aspect of it all, you can understand why the NBA is at the forefront of these transactions. The Association, including the WNBA, caters to this demographic more than any other pro sports entity. They made that much clear years ago, when they were among the first leagues to invest so heavily in sharing and creating content specifically for X (formerly Twitter). In the past few years alone, we have seen the sale of the Phoenix Suns, Charlotte Hornets, Dallas Mavericks, Boston Celtics, and most recently, the Los Angeles Lakers, whose majority stake was auctioned off at a valuation of $10 billion—the same valuation the NFL’s Giants are seeking to match.
Chris Isidore and Matt Egan recently investigated this phenomenon of frequent sales in a feature for CNN. The primary takeaway from the piece? Private equity is itching to buy up as many majority stakes in pro sports as possible. As Egan and Isidore write:
“Sports franchises have long been considered trophy assets, like luxury properties in short supply. ‘The only thing I remember from all those economics courses is when the supply is fixed, and the demand goes up, prices go up. It’s as simple as that,’ said Sal Galatioto, one of the leading sports investment bankers brokering team sales. ‘It is so rare you get a chance to buy control of a premier franchise.’ Sports franchises have grown in value over the last decade. Cord-cutting, streaming and DVRs have made it more difficult for advertisers to reach viewers, meaning live sports programming has become more important.
Major sporting events have reliably been among the most-watched events on television.’Sports content is the lifeblood of the media industry and that drives tremendous value for these franchises,’ said Lori Bistis, a deals partner and one of the leaders of accounting and consulting firm PricewaterhouseCoopers’ sports practice.”
Basically, private equity is flush with cash, and they are finding that spending on sports franchises balances the expectation of both reliable and significant returns on investments. That’s where the Millennial generation comes in.
Will Millennials Continue Paying Enough for Live Sports to Keep This Trend Alive?
Investing in pro sports franchises is so appealing because they are seemingly immune to cord-cutting. They are the only reason some consume any sort of live television at all, particularly when so many streaming services are available.
It just so happens cord-cutting was popularized by Millenials, right around the time streaming services began to mushroom in number, and the generation reached an age at which they were responsible for making more financial decisions. This penchant for ditching cable and the live TV that comes with it has shown little signs of slowing. Legacy media companies are continuously trying to make adjustments—usually in the form of cuts, mergers or by folding altogether.
The potentially ominous sign? Live sports isn’t necessarily keeping them afloat, at least not as effectively as they once were. We have seen Regional Sports Networks (RSNs) implode altogether. The pro sports leagues themselves have been left to pick up the pieces, with owners of franchises figuring out alternative ways to disseminate their games.
By throwing billions upon billions of dollars into pro sports franchises, private equity firms are betting that cord-cutting will not inhibit the continued growth and consumption of live sports any further, if at all. This will eventually become a bet on Gen Z and Gen Alpha. For now, relative to the age brackets, it is akin to investing in Millennials’ interest in live sports treading water or traveling upward.
There is no guarantee it’s successful. And yet, the pro sports valuations speak for themselves. To that end, streaming services may hold the key to longevity in these valuations. We have already seen Amazon come in and broker deals with the NFL, MLB, MLS, NBA and more leagues. And they, in particular, have money to burn. For instance, they are paying more for a smaller NBA rights package, beginning in 2026, than Warner Bros. Discovery shelled out for his marquee package in the previous media deal.
Theoretically, then, pro sports’ business model may have inoculated itself against current and still-to-come cord-cutting and shifts in consumption—at least for the foreseeable future.
