How Can Sports Teams Possibly Be Worth This Much? |
Pity James Dolan: According to the stock market, he is not as rich as he thinks he should be.
Unlike most teams in the Big Four North American pro-sports leagues, the Knicks and Rangers have been owned by a publicly traded company, MSG Sports Corp. The Dolan family trust owned a fifth, and legally controlled all, of MSG Sports, which, as of last week, was valued at $9.5 billion. Or, in the mind of James Dolan, which was valued at only $9.5 billion. Earlier this year, Bob Iger and Josh Kushner said they would buy the Lakers for $12.5 billion; a trio of investors just bought an eighth of the NHL team in Raleigh, North Carolina (where God did not mean for people to play hockey) at a valuation of $2.7 billion. Dolan can check the Forbes and Sportico websites. Both estimate the teams should be worth about $7 billion more.
So, this week, Dolan tried some Wall Street hocus-pocus: One company became two, and the Rangers and Knicks are now owned by separate entities. Their combined value is still $9.5 billion, but Dolan hopes that a more transparent daily measure of how undervalued the teams are will move their value closer to the $17 billion estimate.
That dream can be hard to understand for an outsider. Ten years ago, Forbes estimated the teams’ value below $5 billion. Has the value of the Rangers and Knicks tripled because they have become a great business recently? No. In the fiscal year ending on June 30, the company generated $32 million in earnings before interest, taxes, and depreciation. (That is, for context, the operating profits of a distributor of laundry equipment; it is two-thirds less than MSG Sports made in 2022.) Are the teams worth a lot more because Dolan — after 27 years of being seen as a talentless, short-tempered nepo baby — oversaw the Knicks finally winning an NBA championship? No again. The team would likely be worth the same had Jalen Brunson missed every shot or if Dolan had won five rings over his reign.
The truth is that the prices of American sports teams are post-logic. Their value has, in Wall Street lingo, technical trading dynamics independent from the fundamentals (or the basic rules of finance). In the past few years, prices of sports teams have rapidly accelerated — suddenly in the case of the NBA, relentlessly in the case of the NFL, incredibly in the case of the MLB. In the NBA, Kushner and Iger are buying the team from Mark Walter (who purchased the team himself last year with money that may not have been exactly his) for twice what the Celtics sold for in 2025 — and three times the recent “get-in price” for teams in Minnesota and Phoenix. In the NFL, prices have quadrupled between David Tepper’s purchase of the Panthers for $2.3 billion in 2018 and Vinod Khosla’s purchase of the Seahawks for $9.6 billion in 2026. In the MLB, the Padres (the small-market winner of one World Series game in their entire history) sold for $3.9 billion, 62 percent more than what Steve Cohen paid for the Mets only six years ago.
The most common explanation for all this is that the rich are getting richer, and that the Big Four leagues — the NFL, NBA, MLB, and NHL — rarely make more teams. As Mark Cuban, who sold his stake in the Mavericks in 2023 at a reported profit of over $3 billion, explained to me by email: “When there is a big jump in individual wealth, typically tied to the NASDAQ or an industry like AI creating new fortunes, teams are going to increase in value.” The median fortune on the Forbes 400 list of the richest Americans was $8.3 billion this year. It was $1.8 billion 20 years ago.
A spreadsheet doesn’t capture the appeal of the product of sports-team ownership any more than it does a painting. No one asks for the EBITDA multiple of a Rothko. Why would they for a franchise? And yet the making of new billionaires doesn’t fully explain the specific acceleration in the value of sports teams; the prices of franchises are going up way more than in the case of other things billionaires........