The English Premier League is the most popular sports league in the world. Boardroom examines why its team valuations don’t reflect that.
Sportico released its English Premier League team valuations on Tuesday, with Manchester United leading the pack at $5.95 billion — a 28% increase over two years ago. Yet despite the EPL being the world’s most popular professional sports league, its franchise valuations pale in comparison to the NBA‘s by a wide margin.
Look at the most valuable franchises in both leagues:
Top Premier League Valuations
- Manchester United: $5.95 billion
- Liverpool: $4.71 billion
- Manchester City: $4.43 billion
- Arsenal: $3.6 billion
- Chelsea: $3.47 billion
Top NBA valuations
- Golden State Warriors: $7.56 billion
- New York Knicks: $6.58 billion
- Los Angeles Lakers: $6.44 billion
- Chicago Bulls: $4.09 billion
- Boston Celtics: $3.92 billion
As Sportico’s Eben Novy-Williams points out, the gap between 1 and 10 in the EPL is 12.5x, compared to 3.2x in the NBA. The average NBA franchise value is $3 billion, essentially double the Prem’s average of $1.51 billion.
Why is there such a disparity between the two leagues? Let’s dive in to some of the biggest reasons.
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Promotion/Relegation
The first reason is the largest and most simple. The NBA’s closed system promises membership every year, guaranteeing revenue no matter how you finish on a yearly basis. An EPL bottom-feeder doesn’t have that kind of financial security. It causes a top-heavy league, with Man United worth more than the bottom 14 Premier League clubs combined.
It’s no wonder the top clubs tried to form a Super League. A closed system playing only the top teams would have caused valuations to explode, and a Premier League without pro/rel would also mean a sharp increase for those clubs that are now fighting to stay in the first division.
Salary Cap
The easiest way to limit expenses is to cap spending. Who knew?!
There are technically safeguards in football that are supposed to keep player spending lower than annual revenues, but that’s enforced about as strictly as jaywalking in New York City. While small market NBA teams complain that a soft salary cap and luxury tax penalties aren’t enough of a deterrent for teams like the Warriors and Nets to break the bank, the difference between Golden State’s league-high payroll and Indiana’s league-low payroll is still less than $100 million. We can’t say the same for the EPL, with a canyon-sized gap between the haves and have-nots in nearly every respect.
Regional Sports Networks
While the Premier League pays its teams vast sums in domestic and international broadcast deals, the bottom teams are more reliant on broadcast revenues than any NBA club. Per Sportico, $70.7% of Newcastle United‘s $239 million revenue last season came from broadcast deals.
NBA teams get their share of national and international broadcast deals as well as local revenue from regional sports networks, some of which the teams themselves own. This puts millions, and sometimes tens of millions, of dollars in guaranteed money into the teams’ pockets. Which leads us into our next reason…
Tonnage
Premier League teams play 38 total games, with everyone playing everyone else twice. Other domestic and international competitions add to the total and to the disparity between the large and small clubs who bring home UEFA Champions League and Europa League revenue based on how they fall in the PL standings.
NBA teams are guaranteed 82 games per season, and the playoffs could bring as many as 26 additional games. More teams, more games, more tonnage, larger attendance, more concession and stadium revenues, more hours of content for national and local broadcasts. And every team is guaranteed those games every season. Tonnage is a big reason why the average MLB team is worth $2.31 billion even though it’s nowhere near as popular as the Prem.
Media Market Size
Nearly half of the NBA (13 teams) plays in a US city of more than 2 million. An additional six have a TV market of more than 1.5 million. These are numbers the Premier League and the UK population just can’t compete with. London, Birmingham, Manchester, Liverpool, Leeds, and Newcastle are the only metro areas that reach seven figures, compared to 22 NBA metro areas in the U.S. with populations over 2 million.
While the Premier League is still more globally popular than the NBA by leaps and bounds, the gap in franchise valuations between the two outfits will only grow wider and wider over time.
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