The National Football League (NFL) is fascinating for many reasons besides the action on the field. NFL teams have grown from humble beginnings into robust mid-market companies with a uniquely distinct niche. The NFL today is a massive business phenomenon, commanding a year-round national television presence. The League’s merchandising and marketing operations are truly impressive; the League has even begun efforts to expand interest in the sport internationally.
Observing the League also provides a glimpse into numerous aspects of a unique business world where we can spectate on 32 different business as they grow, evolve, and perform year over year. (For some perspective, Walmart generates about 30 times the annual revenue of all 32 teams combined. But still, each League franchise team is a substantial business.)
Most NFL franchises are closely-held and are managed by a small group, a family, or in some cases a (sometimes very big) personality. (The Green Bay Packers’ shareholder model is a notable exception.) For most companies, business growth often involves a shift in corporate structure, along with new organizational structures, operations, processes, and requirements. For instance, becoming a publicly traded company entails different obligations compared to running a family business, especially in terms of compliance and reporting requirements.
Also, as NFL teams continue to grow and increase in value, the business models of buying an selling these franchises are likely to evolve. As a franchise’s value increases, it becomes increasingly challenging to pool resources from general or limited partners to purchase a franchise. As NFL franchises expand, they may become valuable enough to consider a public offering.
Take the Washington Commanders, for example. The franchise has grown from barely being valued in the thousands of dollars to now being worth billions. Despite the controversies surrounding some of its past owners, the franchise’s value has consistently increased over the years. If the Washington Commanders maintain this steady growth rate, the franchise could have an eye-watering $24 billion valuation by 2050.
Raising private funding for such a high price point could be challenging — and after a certain point, it might be easier, or even necessary, to raise this capital through public markets. The potential implications of an NFL team going public are interesting indeed. Many internal operations that are currently confidential could be subject to SEC reporting requirements and become publicly available. A team may be required to provide transparency on operational agreements and player contracts. And for fans, it could mean the opportunity to become shareholders of their favorite team.
This potential transition from a small company to being publicly traded is the possible evolutionary track of any business that survives long enough and grows significantly. And as with the NFL games themselves, the exciting part is that we’ll get to watch this business saga unfold on national television.