North American franchise values grow by 3.0% in the second quarter.
Sports franchises in the Ross-Arctos Sports Franchise Index (RASFI) representing the “Big 4” North American leagues saw valuation growth of 3.0%, or 12.6% on an annualized basis, in the second quarter of 2024.
Year-to-date, RASFI performance is 7.8% through the second quarter, continuing to pace above the long-term annual average performance of ~13%. YTD, 7.8% growth (16.2% annualized) represents a slight deceleration for sports franchise returns after a record 2023 (27%) but remains in-line with their strong showing in 2022 (16%).
Transaction activity in Q2 points to a modest slowdown in overall control and non-control sale activity in the Big Four in 2024 vs. 2023. However, transactions that are taking place continue to reflect “new normal” valuations for each league in a post-COVID world.
A major driver of valuations through the cycle is media rights growth. In anticipation of a meaningful step-up in the value of their national media contracts, NBA valuations have surged over the last three years, representing a major driver of the index overall. In Q2, the NBA finalized their new 11-year, $76 billion contracts with ESPN, NBC, and Amazon. We estimate the average annual value (AAV) of these deals represents a roughly 2.6x step-up over the prior 9-year deals the NBA had with ESPN and Turner. These new deals will kick-off in the 2025-26 season.
An additional bright spot is the growth in attendance and viewership in MLB for 2024. Last season saw the success of MLB’s various rule changes, including the introduction of the pitch clock, restrictions in the defensive shift, and base size increases. It appears that momentum is continuing into this season. Last year, attendance growth was up 9%, and overall attendance surpassed 70M for the first time since 2017. So far, attendance growth in 2024 is up ~2%; but more interestingly, the average ticket buyer age has declined from 51 years old in 2019 to 44 today, and the share of ticket buyers in the 18- to 35-year-old demo has increased 10.5%. We believe continued MLB fan engagement with the renewed game could be a major near-term tailwind.
Disclosure: The Ross-Arctos Sports Franchise Index (“RASFI") is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase any security. RASFI includes data sourced from third parties and reflects market trends and economic forecasts which Arctos Partners, LP ("Arctos") and Stephen M. Ross School of Business at the University of Michigan (“Ross”) believe to be reliable; however, no independent verification has been conducted, and neither Arctos nor Ross warrants the accuracy, fairness, correctness, or completeness of any information provided. Certain statements included herein may be considered forward-looking and involve risks and uncertainties; actual results could materially differ from those projected. Historical trends indicated in RASFI do not assure or imply the continuation of such trends in the future. RASFI estimates historical sports team valuations based on a series of statistical models that may introduce sources of error. While we believe RASFI reflects past estimates of sports team values, they should not be seen as indicative of future performance or profitability. The benchmarks and indices provided herein were selected by Arctos and Ross for illustrative purposes only. Selection of such benchmarks or indices is inherently subjective and others might select other benchmarks or indices based on their assessment of the market. Actual results may differ, perhaps materially, from the trends presented herein.