Why the NFL and the NBA China are the Right Investment for you

By

Chris Ostrow

Revenue of NFL Teams in 2010-2011

Rank Teams

Current Value ($mil)

1-Yr Value Change (%)

Debt/Value (%)

Revenue ($mil)

Operating Income ($mil)

1 Dallas Cowboys 1,805 9 11 420 143.3

2 Washington Redskins 1,550 0 15 353 103.7

3 New England Patriots 1,367 0 20 318 66.5

4 New York Giants 1,182 0 55 241 2.1

5 Houston Texans 1,171 2 17 272 36.5

6 New York Jets 1,144 -2 66 238 7.6

7 Philadelphia Eagles 1,119 0 16 260 34.7

8 Baltimore Ravens 1,073 -1 25 255 44.9

9 Chicago Bears 1,067 -1 9 254 37.3

10 Denver Broncos 1,049 -3 14 250 22.0

11 Indianapolis Colts 1,040 1 4 248 43.2

12 Carolina Panthers 1,037 -1 18 247 15.0

13 Tampa Bay Buccaneers

1,032 -5 14 246 56.1

14 Green Bay Packers 1,018 0 2 242 9.8

15 Cleveland Browns 1,015 -2 15 242 36.1

16 Miami Dolphins 1,011 0 40 247 -7.7

17 Pittsburgh Steelers 996 -2 25 243 17.9

18 Tennessee Titans 994 -1 13 242 23.3

19 Seattle Seahawks 989 0 12 241 34.0

20 Kansas City Chiefs 965 -6 14 235 47.8

21 New Orleans Saints 955 1 13 245 36.7

22 San Francisco 49ers 925 6 14 226 21.0

23 Arizona Cardinals 919 -2 16 236 28.1

24 San Diego Chargers 907 -1 14 233 24.7

25 Cincinnati Bengals 905 -5 11 232 49.4

26 Atlanta Falcons 831 -3 33 231 34.5

27 Detroit Lions 817 -6 43 210 -2.9

28 Buffalo Bills 799 -12 16 228 28.2

29 St Louis Rams 779 -15 8 223 29.0

30 Minnesota Vikings 774 -7 36 221 17.9

31 Oakland Raiders 758 -5 7 217 2.2

32 Jacksonville Jaguars 725 -16 17 220 25.9

Source Forbes.com

The best long term investment in American sports is purchasing an NFL franchise. Your

investment will see immediate return if we invest in an untapped market. My plan in place is to

take the game of football where it hasn’t been for the past 15 years Los Angeles, California. Los

Angeles is the second largest media market in the world and currently does not have a franchise

a place. Plans have already approved to build a stadium by Governor Arnold Schwarzenegger. I

am going to examine the latest NFL franchise the Houston Texans and there growth over the past

five seasons. I am also going to evaluate the growth of a potential team in Los Angeles.

Project Site Statistics

Total Square Acreage: 592

Stadium (with Team Facilities): 75,000 Seats, including 12,500 Club seats and 176 Suites

Office Buildings: 1.49 million sq ft

Retail Shops: 833,000 sq ft

Restaurants: 162,000 sq ft

Live Theater: 5,000 seats (60,000 sq ft)

Movie Theater: 1,200 seats (60,000 sq ft)

Green and non-parking Open Space: 271 acres

Stadium Statistics

Total Seats: 75,000 (expandable to 80,000 for Super Bowl games)

Suites: 176

Club Level: 12,500

Team Offices: 45,000 sq ft

National Football League (NFL) Attraction: 40,000 sq ft

Team Store and Other Sponsored Retail Stores: 30,000 sq ft

Restaurants: 30,000 sq ft

Banquet facilities: 20,000 sq ft

NFL Team Training Facility: 115,000 sq ft

Medical Center and Clinic: 100,000 sq ft

Parking Spaces: 25,000

According to LosAngelesFootballStadium.com/stadium

Reliant Stadium

Total Seats 71,500

Number of Suites   187

Distance from suites to sideline Lower Suites Upper Suites

 . 

 130 ft. 178 ft.

Quantity of sideline seating    44,000

Club Seats  8,200

Schedule (Year ready for NFL) 2002

Full Rodeo Compliance Yes

Parking (20,000 spaces) 

 Yes 24,000 to 26,000

Full NFL Compliance Yes

Major League Soccer Compliance Yes

Olympic/Pan Am Games Compliance   Yes

Natural Grass Yes

Retractable Roof Yes

Proximity to Exhibition Space Yes

According to http://football.ballparks.com/NFL/HoustonTexans/index.htm

As you can see both stadiums are very similar in size and suites which has lead the

Houston Texans in under ten years of existence to rank as the fifth highest revenue generating

team. We have a huge market in which sponsors around the world would be interested in

advertising with us. There is tremendous potential in PSL’s and our Club Suites. We can also

make money off of parking, merchandise sales, year round events, and broadcasting fees. My

ultimate plan if we built this stadium would be to host the Super Bowl within the first five years

of our existence. According to (Stricklin, Art D Magazine Special Report: Super Bowl) When

Houston hosted the 2004 Super Bowl, its first in 30 years, the local Super Bowl committee

projected the Houston area would enjoy $336 million in revenue in a pre-game report filed with

the Texas Comptroller of Public Accounts, Mackovets recalls. When the final receipts came in,

Houston earned $340 million for the Southeast Texas region. In North Texas, a report

commissioned by the Super Bowl host committee projected a record economic impact of $611.7

million from next year’s game.”

Houston spent 700 million dollars to join the NFL off the top as a franchise fee but we

can make that back easily by hosting the Super Bowl and using some of our naming rights of the

stadium. Houston’s Reliant Stadium signed a contract to have its naming rights of the stadium

up until 2032 and Houston makes on average 10 million dollars a year off this contract.

Everywhere you turn you can see an NFL product being sold. As the newest franchise in

the league we can easily capitalize off of this. According to ehow.com “In 2006, the NFL took

in over 3.2 billion dollars worldwide in merchandise sales. Replica jerseys by themselves

accounted for twenty percent of the take.” With the right marketing team in place every kid in

the world would want to wear a Los Angeles football team jersey.

The NFL has several large broadcasting contracts in place with ESPN, NBC, CBS, and

Fox. Directv also has a contract in place with the NFL for up to ten years in which each team

receives up to 44.8 million dollars of revenue. Verizon and the NFL have a contract in place for

four years at 720 million dollars, which would allow fans to stream live footage of games to their

cell phones. According to the Sports Business Journals (Kaplan, Daniel) “NFL Commissioner

Roger Goodell wants the league to reach $25 billion in revenue by 2027, an amount that would

mean adding nearly $1 billion in new revenue on average each year until then.” You may say

that sounds ridiculous but it is possible as you can see by examining the salary cap from 1994 it

was 34.6 million dollars. “After several blockbuster national TV contracts and a surge in NFL

popularity, league revenue last year hit $8.5 billion, lifting the cap to $128 million, a more than

threefold increase from 1994.”

The NFL average revenue in 2009 for luxary suites and rentals was 146,734. The current

television deal in place is 3,700,000 till 2013 for the NFL and the average per team yearly is

115,600,000. According to the U.S Census Bureau the population of Los Angeles is 9,848,011.

An investment in a Los Angeles stadium can be built in about 30 months and could create up to

3,000 jobs for the Los Angeles community. The stadium itself is easily accessible with three

airports within thirty miles of a stadium, metrolink services available, and several major

freeways surrounding the stadium. Overall we project that at least 400 million dollars of revenue

could be made in an investment in a Los Angeles football franchise.

If you are looking to invest in a new over sea’s league you should look no further than

NBA China. According to the Sports Business Journal “NBA China revenue is estimated at

roughly between $150 million and $170 million.” NBA China accounts for over half of the

revenue that NBA international receives. The Walt Disney Company has poured over 253

million dollars in backing of NBA China. Some other key sponsors that are backing it are Visa,

Coca Cola, Nike, and EA sports.

According to The Sports Business Journal “The total number of NBA games broadcast

and streamed nearly doubled during the 2009-10 season, up to 1,937 games this year from 1,072.

last year, with the sheer volume of programming dwarfing the media presence of any other U.S.-

based league in China. In addition, the increase in web traffic is staggering. Since the creation of

NBA China, the number of page views on NBA.com/China has grown by 60 percent and video

usage on the website has increased 385 percent compared with the 2007-08 season as NBA fans

in China begin adopting more consistent viewing patterns of NBA programming.”

There are 17 teams in place already and with our investment to make a stadium in China

we can create one of the most successful of them all. There are over 1 billion people that live in

China and many of them are obsessed with basketball. The NBA has coaches in place and are

running clinics for them to help them develop home grown talent.

There is a huge amount of money to be made in naming rights for stadiums. According

to NBAinChina.com “In what is considered a first in China – the NBA and AEG have managed

to sell the naming rights of this arena for an estimated value of ~$100 million (terms of the deal

have not been announced and analysts estimate anywhere from 75-150$ million dollars)  to

German luxury car maker Mercedes-Benz. The stadium will be ready in time for the 2010 expo

set to begin in May, but the deal and naming of the stadium will only begin in 2011 and last a

total of 10 years. To put the price in perspective, Staples had to pay $100 million for the rights to

name the arena where the prestigious Los Angeles Lakers play along with the Los Angeles

Clippers and Los Angeles Kings (NHL) for a contract lasting 20 years.”

The game of basketball is easy to follow and has great popularity since it was introduced

in 1890 by missionaries. The NBA is playing several preseason games in China and an investor

should put his money to into this league before the opportunity passes you by. According to the

New York Times “ But in China, the N.B.A. was one of the most recognizable American

brands, even before Yao Ming joined the Houston Rockets and became an international

celebrity. NBA games have been broadcast in China for two decades, and spurred by the status

of the sport, the government is building tens of thousands of courts in villages around the

country. This year, Kobe Bryant jerseys outsold Yao jerseys.”

In such a short period of time NBA China along with the CBA has made a great

economic and social impact in China. I believe it would be a wise investment to take your

money and put it into an expansion team in a rapidly growing sport.