Valuing Franchises: How Sports Teams Break the DCF

Franchise value has been increasing substantially in recent years – evidenced by Forbes’ recent valuation of NBA franchises that showed an overall increase of 72 percent since last year, with three teams valued over $2 billion and eight more teams valued over $1 billion. The disconnect between published franchise valuations and actual purchase prices continues to be magnified as ownership structures have migrated from wealthy individuals to groups, providing the resources to bid higher and higher in a market of limited supply. Further compounding the issue is the unique economics and business of a sports franchise and its players that further clouds the ability to clearly understand a franchise’s value. With a group of leading experts in valuation from the realm of academia and industry, along with franchise owners, this panel explores the key issues and insights to valuing franchises using analytical tools. Topics for the panel include: valuation differences across sports, measuring the impact of player contracts, point in time valuation during a franchise’s lifecycle and quantitative versus qualitative impacts in franchise valuation.

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