The crash on Wall Street yesterday reverberated right through the Indianapolis Colts’ 56th Street headquarters.
How on earth are a stock market decline and the National Football League related? Here’s how.
Forbes magazine last week released figures showing 19 of the 32 NFL teams’ values surpassed $1 billion. Only five teams’ surpassed $1 billion just a year ago. This should be enough to make NFL owners as giddy as Jessica Simpson after a Tony Romo touchdown. The Colts, playing their first year in a new stadium, were among the biggest gainers, with a $1.08 billion valuation, good for eighth in the 32-team league.
But yesterday’s devastating day on Wall Street shed a more realistic light on things. Bear Stearns is history. Lehman Brothers is probably next. Merrill Lynch also has big problems. The credit markets have been hit like a quarterback with a rookie-laden line of scrimmage, and the U.S. dollar is weaker than the Colts run defense.
Much of this nation’s wealth is tied up in the stock market, which means North America—the only market for an NFL franchise—just isn’t as stocked with billionaires as it once was.
Supply and demand principals would dictate that there’s no way the Colts fetch $1.08 billion on the open market no matter how spiffy Lucas Oil Stadium is. Want proof? Forbes valued the Pittsburgh Steelers at $1.01 billion. It’s no secret the team is on the market, and the high bidder, Stanley Druckenmiller, is offering $800 million. Forbes concluded the St. Louis Rams carry a $929 million valuation. The team is getting little to no interest at an $850 million asking price.
Today, a more realistic value of the Colts is $825 million. Who knows, if they get parking issues and the acoustics straightened out at the new stadium, the team might go for $840 million.
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Of course Market Conditions impact all teams, but the Forbes annual study reflects the NFL contracts, the general direction of franchise prices, and specific team conditions.
Also, I really question just how much a local reporter knows about the behind-the-scenes deal numbers being floated for say the Rams, Bills, Jags, Saints, etc... The LA situation makes the situation a little more complex. Finance money is a bit harder to come by today than it was just a few months or years ago. Plus the number of teams on The LA List does make just a handful of potential buyers dilute over a number of potential teams.
But the overall point is TEAM VALUE and SELLING PRICE are not the same thing. Look at the housing market for a quick example. APPRAISED VALUE and actual SELLING PRICE just aren't the same. Give it a few years and I guarantee most NFL franchises will be hovering around that 1 Billion dollar mark. Plus, wait until the next NFL/TV deal and you will see that value surpassed and then some.
The key is are not necessarily the same thing. But as you bankers know, value and selling price can be -- and in fact -- often are the same thing. And dare I say that history teaches lessons, but does not guarantee the future. To guarantee that most NFL teams will be hovering around $1 billion valuation in a few years is pretty audacious.
I think I can make a similar argument. This article stinks, which is a part of the IBJ, so that means the IBJ will have fewer readers and is worth less because of this worthless article.
No, the IBJ is fine and actually probably the best local business publication I can think off, however, in terms of Sports Reporting, the IBJ as expected is quite Bush League to steal a sports term.