[Elvis]

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How To Account For NFL Relocation To Los Angeles In Our Team Values

Mike Ozanian

On September 14 Forbes will launch this year’s NFL team valuations. Hardest part of the exercise: how to account for which franchises, or franchise, the league will let move to Los Angeles?

My colleagues–Kurt Badenhausen, Christina Settimi–and I are crunching the numbers while the league ponders its two likely choices: the San Diego Chargers and Oakland Raiders move to Carson and share a stadium, or the St. Louis Rams move to Inglewood. Speaking with team owners the past few weeks has revealed little in terms of how the league is going to vote. But on thing is certain: the decision will not be made until after our NFL ranking is published.

The result of the NFL’s decision will impact hundreds of millions of dollars in team worth. With national media and league sponsorships with companies like Pepsi and Visa split evenly among the 32 teams, the pecking order of NFL team values is largely determined by stadium revenue (net of stadium debt service). More specifically, revenue from premium seating, stadium advertising, and revenue from non-NFL events at the stadium. The Chargers, Raiders and Rams all fell among the bottom seven teams in our valuations last year primarily because of their bad stadium economics.

Although our valuations will incorporate revenue from the 2014 season, we adjust the multiple we apply to revenue to calculate our enterprise values for each team if we know the team is going to get a new stadium. For example, last year we increased our multiple for the San Francisco 49ers because they were moving into Levi’s Stadium for the 2014 season, which meant the team was going to get a lot more money from premium seating and the like.

All things being equal, I think Oakland is the best football market of the three in their current locations and has the best potential for corporate sponsors given its proximity to Silicon Valley. I’d rank San Diego second, followed by St.Louis. But if the Raiders don’t move to Carson they have the most to lose because Oakland has made the least progress of the three teams for a new stadium. The good news for the Rams is they have the best prospects for a new stadium in their current city.

A positive for the Carson stadium is it would be busier with two teams, like New York’s Giants and Jets at MetLife, than Inglewood. What bothers me about Carson is that the Chargers and Raiders would be new franchises in that market. How do they deal with selling personal seat licenses, suites and season tickets to different fans? While the Rams move to Inglewood would mean only one team, it would be cleaner and thus make marketing and sales easier.

A final thought. The NFL needs Los Angles to be the statement stadium for the league. The bright lights, Hollywood and all. That makes me think Inglewood.

All this leaves me thinking the Rams will move to Inglewood and be valued more than Raiders and Chargers. But we still have time to mull and report, thank goodness.

[BuiltRamTough]

Yes yes and yes.