How important is team success to a NFL franchises value?

An NFL team’s value is composed of many different factors, such as market size and demographics, ownership and management, stadium and facilities, and team success. But how important is team success to an NFL franchise’s value? First let’s look at the top and bottom valued NFL franchises.

The Top 5 and Bottom 5 valued NFL franchises (via Forbes)

First, let’s look at the top 5.

1. Dallas Cowboys – $9 Billion 
2. New England Patriots – $7 Billion 
3. Los Angeles Rams – $6.9 Billion
4. New York Giants – $6.8 Billion
5. Chicago Bears – $6.3 Billion 

Next, let’s look at the bottom 5.

28. Jacksonville Jaguars – $4 Billion
29. Arizona Cardinals – $3.8 Billion
30. Buffalo Bills – $3.7 Billion
31. Detroit Lions – $3.6 Billion
32. Cincinnati Bengals – $3.5 Billion

From these lists, we can see a clear trend of how big market franchises(franchises in big cities) rise to the top, while smaller market franchises(franchises in smaller cities) fall to the bottom. However, there is an exception to this trend. The Arizona Cardinals cannot be considered a small market, as they rank 5th in the US for largest cities, 10th in metro population, and 11th in the 2023 DMA rankings (media markets). This brings up a key question. 

Why are the Cardinals valued so low, if they aren’t in a small market?

A key point you could make is that the Cardinals haven’t had a ton of team success over the last ten years. However, the team since drafting Kyler Murray in 2019, have consistently had a better record, however, their rank in terms of value has fallen further down. This could also show that team success doesn’t play as big of a role in the calculation of team value. 

Like I brought up earlier, a key factor in the valuation of an NFL franchise is the stadium and facilities. This also includes not only the value of the stadium itself, but the amount of revenue it brings in, and how profitable it is. The Arizona Cardinals have a lease with the state that doesn’t allow them to pursue non-football activities, and the state controls what they are able to do in the stadium very closely. Since the Cardinal’s only paid for 25% of their stadium’s construction, they don’t get as much revenue from the stadium compared to other NFL franchises.

An example of an NFL franchise that maximizes their stadium’s revenue, is the Dallas Cowboys. Jerry Jones, the owner of the Cowboys, invested $1.3 Billion dollars in the construction of the stadium. This meant the Cowboys were the main stayers in AT&T stadium, and they collect the majority of revenue from the state. For comparison, the Cardinals spent around $100 Million. This trend, where the NFL franchise’s owner invests a lot in the construction of a stadium is evident among the top valued NFL franchises.

So, how important is team success to the value of an NFL Franchise?

From my analysis, I think that team success does play a role, but stadiums, ownership, and mainly market value play a bigger role. For example, all the top 5 ranked teams are in the top 5 biggest cities in the US. The bottom 5 teams are all small market, with the Cardinals being an exception. 

However, I think team success starts to become more of a factor if you repeatedly fail to win every season. Rebuilding seasons are phases that every franchise will have to go through at some point, but constant losing seasons can be detrimental to ticket sales, and can create a negative connotation towards that franchise.

So even though the Panthers are having a rough year in terms of team success, don’t expect them to drastically fall in terms of franchise value. 

Credits:

https://www.bizjournals.com/phoenix/news/2022/09/18/why-arizona-cardinals-low-nfl-valuable-franchises.html

https://www.forbes.com/lists/nfl-valuations/?sh=414265d17386

https://bleacherreport.com/articles/2794118-cardinals-state-farm-agree-to-18-year-stadium-naming-rights-contract