NFL Franchise Values and Salary Cap

The other day I was listening to a talk radio show where the guest was NFL “insider” Jason Cole. They were discussing the sales price of the Denver Broncos, and Cole talked about how much NFL franchise values have increased over the past decade and how they will continue to increase. He then said the salary cap has not increased anywhere near the same rate and that the players are getting shafted under the current system.

When I heard him say that I was just rolling my eyes. Just because an NFL franchise value has increased does not mean that the owner suddenly has more cash in his pocket to pay the players. The salary cap is tied to revenue, which is as it should be. As revenue increases, the owners have more money, so it follows that the salary cap should increase accordingly. I wondered if Cole is so dense to not know this or if he knows this but didn’t care that what he was saying was malarkey.

This reminds me of when certain liberal politicians in California want to repeal Proposition Thirteen. You can expect to hear that since property values have gone up so much, it is only fair that the owners pay more property taxes. Whenever I hear somebody say that I want to ask that person how he thinks the increased property value means that that homeowner suddenly has more cash in his pocket.

Am I on-base or out to lunch here?

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The increase in team values came from somewhere, largely revenue. The value of the teams is tied to what they bring in.

Regarding prop 13, a lot of that comes from the fact that they locked in assessments at artificially low levels, which don’t change as property values rise

Yes, and they did that because before that you had people being forced out of their homes because they could not afford the higher property taxes when their property values soared.

Pardon my ignorance but most sports teams are not overly profitable are they? That is something I have been told by people in the industry. Typically people own them as a status symbol.

That is not true with professional sports in general and the NFL in particular. Franchise values seem to go up regardless. As for the NFL, these two links from the same source show how revenue and franchise values have increased over past twenty years. The rate of franchise value increases far exceeds that of revenue increases.

I am far from an expert on this, but based on what I have read it is generally understood that under normal market conditions (i.e. no pandemic) it is just about impossible for an NFL franchise to lose money. The NFL just about prints money.

As for professional sports in general, it depends on the franchise, the market, etc. Some franchises in larger markets with larger revenue streams have an easier time than franchises in smaller markets. You can see that in Major League Baseball where teams like the New York Yankees and Los Angeles Dodgers can afford to keep any player they want while teams like the Pittsburgh Pirates and Milwaukee Brewers can not. Similarly some of those franchises are profitable, while others are not.

And, there is a difference between franchise value and franchise profitability. From what I have read, the value of any major professional sports franchise will increase, regardless as to how profitable it is. As one example from many years ago, going on memory, there was an article about the tenure of one of the owners of the Seattle Mariners. It said that he bought the team, lost money every year, and sold it for a nice profit in the end

NFL isn’t the team owners. I’ve heard that the revenue splits and fees make the nfl rich but the teams not so much.

To be clear I have no clue. I don’t keep up with sports. I did do IT contracts for the nfl. So they told stories how rigged the system is but it went all over my head.

That’s why the pay for many positions is so low. They just don’t have the funds to cover it. Their vp of it wasn’t paid well. He did get all the tickets he Wanted. So I guess that’s a plus

I think the increase in team value is due partially to increased revenues, but just as much from the anticipated growth in value. That growth may not be related to anything tangible, but just an anticipation that things will continue as they have (plus the ownership status as WM mentioned). I am not sure how most teams are structured, but I have to believe the owners are able to treat any gains as capital gains, which are currently taxed at a max of 20% (only about half of the highest income tax rate).

Really hard not to laugh at this statement. Whats the average NFL salary compared to the average worker salary ?

Just curious…when someone sells a home does the new owner keep the original assessment? Or does it get reassessed based on the sales price?

When a home is sold it is reassessed based on the sales price. The only exception would be if the new owner was 55 or older and allowed to carry over his Proposition 13 assessment from his previously sold property. Regardless, the new owner does not keep the previous owner’s assessment.

As I understand it, there is a reassessment, which leads to massive disparities in tax rates. Keep the property and you might be paying much less than your neighbor who bought recently. And businesses have low rates because they change hands less often.

In states without a prop 13 type law longtime homeowners are often forced out of their home because they can’t afford the taxes. It happens often with regentrification, a retired couple have been in a neighborhood for 40 years and their taxes go up from a few thousand a year to over $12,000.


Just like the stock market… the value is based on future earnings. Not current revenue.

Would anyone buy stock in a Company with great earnings but a declining industry… Movie Rentals comes to mind.

The Salary Caps will be adjusted as the revenue is realized.