With the Broncos poised to go for $5 billion or more at some point before the start of the season, it makes sense to think about the ongoing rise in the value of teams. Especially since the Broncos, all due respect, are not among the most valuable of all NFL franchises.
The most valuable would be the Cowboys. Owner Jerry Jones, who bought the team for a measly $150 million in 1989, has an idea in mind for which his team would fetch on the open market.
“Ten up,” he told Peter King of Football Morning in America.
In other words “more than $10 billion.”
Jones added this: “Let me make this very clear. I’ll say it definitively. I will never do it. I will never sell the Cowboys. Ever.”
He supplied an important caveat to his estimate of his team’s worth. We applied an asterisk in the headline to the notion that the team’s value doesn’t matter, because in one very important way, it does.
As mentioned recently regarding the alleged “financial disorder” within the Raiders organization, the passing of team patriarchs and/or matriarchs will eventually result in a massive estate-tax obligation. The final number owed to the federal government by those who inherit the equity will be 40 percent of the value of the team.
It requires careful planning, as it relates to the transfer of equity before the event that would trigger the estate-tax obligation and as it relates to the ability to generate huge sums of cash quickly. The exploding value of NFL franchises makes it more challenging to ensure that the bill from Uncle Sam in the amount of 40 percent of the entire value of the team can be minimized and/or satisfied.
At a time when many presume that the mega-rich find ways to pay minimal taxes, the estate tax is a real consideration. One that requires careful and deliberate planning, taking the ever-increasing value of these franchises fully into account.
There’s no reason to think the Jones family eventually will struggle to make estate-tax payments. As time passes and the value of the team keeps increasing, however, the estate-tax obligation will increase, too.
It’s an amazing return on the initial investment made by Jones, especially since he was criticized by some for making that investment at the time.
“Back then,” Jones told King, “Donald Trump said he felt sorry for the guy who bought the Dallas Cowboys. He called it ‘reckless crazy.’ And we really were America’s Team, because the FDIC owned 5 percent of the franchise. Every day, my motivation was simply to survive. I danced with the devil, and it created an edge with me. I didn’t want Jimmy Johnson to fuck with me because I just lost my tolerance after what I went through in my early days.”
The value of franchises keeps increasing because of TV and, in recent years, the rise of legalized gambling.
“So how does it feel to see some of these values now, and see the value of the Dallas Cowboys now?” Jones said. “Just go back to the early days, and you can see how the game has improved and become such a part of American life. Did you know that seven percent of fans have ever gone to an NFL stadium? The rest fell in love with it through the viewing of the games. The pageantry, the aura, the interest of a fan base, the fact that an Al Michaels can relay the excitement of the game to a fan base. You put that up beside anything in society today, and you’ll increase the value. That’s where these values are being appreciated.”
Jones is right. In a society that has seen three TV options fracture into limitless streaming content at any given moment, pro football is the one thing that can bring a massive audience together, in real time.
That’s driving the revenue. Which drives the value. Which will make more teams than the Cowboys worth “ten up” sooner than later.