How Can Sports Teams Possibly Be Worth This Much?

This article was featured in New York’s One Great Story newsletter. Sign up here.

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 enjoy, like art and Hamptons houses.

When I began writing this article, I assumed that the inexplicable then had the usual explanation: It’s a bubble. Sport teams’ leaps in price look familiar, like other markets right before a crash. There’s a long way down in valuation for things like the Rangers and Knicks from 313 times the $32 million they made last year. (The median large American company trades at 15 times cash flow.) And it would follow that if our current economy seems optimized solely to inflate billionaires, market history teaches us that there always come periods when economies (or societies) deflate billionaires — and the bubbles caused by their whims. “When markets decline,” Cuban told me, “you will see what happened to team valuations from 2002 to about 2012 happen again.” But in those bad ten years? Values of teams still doubled.

Something else is happening. Sports teams have become a product with unusual and special characteristics. They have the unshakable appeal to billionaires of personal transformation — they can make Steven Cohen, once an unsmiling hedge-fund manager, “Uncle Steve” — and the unparalleled financial characteristics of as-sure-as-the-calendar-advances rising value. The logic behind this is circular, but also imperishable, as long as there are buyers. And the buyers are still lining up, paying valuations on a vibe even more loosey-goosey than before.

In the olden days, when gamblers and moguls with loud ties owned teams, they did not really try to make money. Three weeks after the Mets won the World Series in 1986, the New York Times reported that for the next season, “box seats would cost $10 and reserved seats, with one exception, would cost $8.50, an increase of 50 cents in both cases.”

One part of the current values of sports franchises is simply the end of this era. Sports teams get revenue from four sources — sponsorships, local media rights, national media rights, and ticket sales (along with the $65 parking, $200 jerseys, and $18 beers that come with them) — and have become particularly good at squeezing the last two. Teams “own” their fans and their fans’ children. (Hello, Jets dads.) So where else can a fan — or Fox Sports — go? An investor told me that something would be wrong if the Seattle Seahawks didn’t sell for 50 percent more than the Washington Commanders; the NFL got 80 percent more for its new 11-year TV package between the two sales.

As Ian Charles, a co-founder of Arctos, the dominant private equity buyer of minority interests in sports team, explained to me, “Every team is actually two things: It’s a piece of the league and a local live entertainment business. The league piece is the same for everybody. The value of the license to operate a protected local live entertainment business is a function of the market, the building deal, and the skill of the operator.” For some, the local entertainment business is actually a liability — I’ll spare the feelings of the team he mentioned — and the team is worth less than the (rapidly appreciating) generic piece of the league.

Still, none of this has made sports teams a great business, if we define a great business by how much profit it makes or how consistently those profits grow. (Which, for the record, is how we define a great business.) NFL teams make an average of $127 million dollars per year pretax. With a few exceptions, other teams are “break-evenish.” Some lose money.

When I spoke to Marc Lasry, the billionaire founder of Avenue Capital and former co-majority owner of the Milwaukee Bucks, he said he bought into the Bucks at about 100 times cash flow in 2014. He thought he had a straightforward plan to boost the profits of the team. What he soon realized was that the easiest way to “increase profits was by not investing in the team” and giving higher salaries for better players. “But the problem with that is very simple: You don’t want to be horrible.”

So in a business with inverted economics in which the desire to show the world who’s boss competes with a theoretical need to make money, Lasry’s strategy shifted. “We pretty much spent all the money we made every year to try to compete,” he said. It worked on the court. The Bucks won the NBA championship in 2021. It worked out fine for Lasry too. He sold his stake in 2023 at nearly seven times the valuation of what he paid for it.

The inverted economics is why sports teams have never traded on earnings, which is how you’d assess the right price to buy stock in Amazon or a pet-grooming business down the block. They also don’t quite trade like art, on some hazy combination of aesthetics and scarcity. Teams trade by mutual agreement, in a market with enough buyers, on revenue, roughly 6 to 10 times for those in the NHL and MLB, and 10 to 14 times revenue for teams in the NFL and NBA. (Iger and Kushner’s bid for the Lakers is higher than that: 18 times revenue.)

In other industries, like tech, revenue multiples are usually valuation’s opening act before companies become profitable (like Amazon). But pro sports teams have been around for decades. The Green Bay Packers, 107 years old, are the eighth or so most popular team in America’s most popular sport. They publicly report their finances to their public owners. Their revenue grew from 2015 to 2025 by about 6 percent per year. That is the same aggregate growth rate as companies in the S&P 500.

No, sports teams aren’t becoming more valuable because they are suddenly more profitable businesses. (They also have challenges: in labor costs, changing viewer habits, imploding regional cable networks, competition from other sports, declining cultural hold.) Sports teams also aren’t becoming more valuable because of another clichéd reason I hear all the time: institutional private equity buyers. According to Charles of Arctos, because of the severe restrictions on which and how private equity firms can buy minority stakes (and only minority stakes), his firm has about 75 percent of the market. It has a Padres’ worth of capital, not enough to shape the value of 124 teams worth about a half-trillion dollars in total. Private equity funds are lending money to sports teams, such as the bulk of capital in the widely misreported transaction between Apollo and the Yankees; they are also investing in emerging sports and the awful professionalization of youth sports. But these are speculative, riskier (if potentially higher returning) infusions of capital into new ventures, not the safer bets into Big Four teams.

In fact, private equity buyers aren’t even usually the best buyer of a minority stake in a team. When I spoke to Sal Galatioto, a blunt, high-energy 74-year-old pioneering sports-team banker, he said in his last 16 assignments, he’s not once sold a minority stake to private equity: “High-net-worth individuals, because of ego-gratification value, because of the perks they get, and because their investment horizons are 30 to 40 years whereas a private equity fund has to sell this thing in 7 to 10 years — they’re always willing to bid more.”

If we are generous to clichés, we could say that private equity dudes are partly shaping the team market. The people buying majority control of sports teams nowadays are almost all in finance (VC, hedge funds, private equity), tech, or the intersection thereof. That is, of course, because that’s the way you can frictionlessly and scalably make billions in America today — maybe second only to inheriting a pro sports team.

For these majority buyers, the product of sports-team ownership has way more ego-gratification benefit than for minority owners, whose rights might not extend much past taking your brother-in-law to fist-bump Kevin Durant in practice. Being the controlling owner of a team can make you a local god, a maker of dreams, a buddy to heroes. At this year’s New Orleans mayoral inauguration, after the new mayor, Helena Moreno, sat down, Gayle Benson, the owner of the Pelicans and Saints, walked into the ceremony surrounded by security. At that moment, I realized that I live in a constitutional monarchy on the Mississippi.

Being a majority owner has tax benefits, too. But its most amazing feature — the core of its differentiation from other glamorous money-pit investments like restaurants — is that every owner, for as long as anyone can remember, has always made money when they sell, with maybe no down years. Charles told me about the returns of one team investor. “There’s nothing amazing about a 13 percent growth rate,” he said. “What’s amazing is how long he compounded 13 percent.”

And so James Dolan’s move underlines an unflattering fact: there remains a “Dolan Discount” of $7.5 billion, the difference between the value the stock market places on the Knicks and Rangers owned by his public companies compared to what almost everyone thinks they could fetch in a sale. Because, yes, someone would almost certainly today pay him $4 billion for the Rangers and a Lakers price for the Knicks. New York is bigger; the sports fans are better. Majority-control transactions remain rare, about four per year. There are multiple bidders for everything for sale, including the Seahawks. Marc Lasry suspects the Lakers would have gone for more than $12.5 billion had Mark Walter had a competitive auction for the team.

Whether it’s the Knicks or another team, for the product of owning a sports team to lose its most attractive feature something almost unimaginable would seem to have to happen after 50 years. Team buyers would have to start losing money.

There is a recent catalyst to the unthinkable in other industries: AI. But in the sports-team market even this seems to be working in owners’ favor. In sports, people cite AI as the reason why the market won’t change. Constantly, people told me that owning a team is “a hedge against AI.” This is yet another stupid cliché in this market — not because it can’t be true, but because it’s incomplete. A farmer doesn’t “hedge against corn”; he hedges against corn prices falling. Hedges need verbs.

Charles told me that the relative AI impact could be modest, with sports-team values simply resilient, increasing by a couple of percentage points faster than the market as a whole. But the press release introducing the Kushner firm that would go on to bid on the Lakers had darker undertones: Thrive Eternal is seeking to invest, it said, in “assets with qualities that cannot be replicated by technology. Iconic franchises and cultural institutions rooted in tradition, identity, and shared experience. In a world shaped by abundant intelligence where creation scales and distribution fragments, we believe they will matter even more.”

In other words, everything else is likely to matter less or wither away. Or as Galatioto said to me, “I’d bet you anything that the Yankees are more likely to be around in 100 years than Apple.” Apollo, for its part, recently called the Yankees, lovingly, “AI-resistant leisure.”

And so the most recent logic underpinning the prices of sports teams is not a hedge against AI. It’s just another bet on AI, that teams will get more valuable as AI gets more disruptive. No one is going to want to watch robots play football, the thinking goes. People are likely to be even more hungry for hug-a-stranger, heart-stopping, consequential-against-all-common-sense unscripted experiences.

Dolan’s dream of $17 billion for the Rangers and Knicks is not just a circular-logic valuation — the teams will be worth more because people will pay more; and people will pay more because teams keep on rising in value — but also an AI-vibe valuation. Owners and wannabe owners think so much could fail in society. But not your team. You will keep watching them, no matter what happens. And somehow, inexplicably, as always, this means that the owners will get richer still.