The Denver Broncos Sale Shows How Completely Wrong the “Experts” Were About Valuations

News of the sale of the Denver Broncos to Rob Walton and Walton-Penner ownership group broke yesterday, and the reported terms are staggering.

At over $4.6 billion, it represents the highest value for a sports franchise in American history, far outpacing the $2.4 billion paid for the New York Mets.

This price is surprising for a number of reasons, not the least of which is that the Broncos, like most sports teams, were forced into a catastrophic loss of attendance by government imposed COVID restrictions:

Denver Broncos Attendance Figures from 2017-2021

Even with the drastic reduction in revenue from game day tickets, parking, merchandise and food and beverage sales, the Broncos were apparently still worth a record setting price.

This purchase seems to indicate that the trend of sports franchise values being driven mainly by television revenue and exclusivity continues to grow.

While limitations on fan attendance are unlikely to return, the fact that the Walton group was willing to pay this remarkable fee even after financial challenges of 2020 shows that in person attendance is increasingly becoming a smaller portion of the NFL revenue pie.

The Broncos, while they are a significantly more successful franchise than say, the Lions or Browns, are nowhere near as desirable of an ownership opportunity as the Cowboys, Patriots or Pittsburgh Steelers, teams with devoted national fanbases and/or recent runs of success. Even so, the opportunity to own an NFL team comes along so infrequently that bidding reportedly could have exceed $5 billion.

When the Dodgers, a historic franchise in one of the nation's two largest media markets, sold for $2.15 billion in 2012, many considered it an exorbitant price, with one report quoting a Michigan sports management professor calling it "the craziest deal ever."

Laughably, the professor claimed the Dodgers investment would likely never be profitable, saying his models couldn't make sense of the transaction:

Now just ten years later, a relatively mid-tier NFL franchise sold for more than double that price.

How high will bidding go for the next team to come up for sale? The bar for sports team ownership just keeps going higher.