Sports franchise means the contractual right granted to any person or persons to own or operate a sports team which is part of the National Hockey League or National Basketball Association
National Basketball Association
The National Basketball Association is a men's professional basketball league in North America, composed of 30 teams. It is one of the four major professional sports leagues in the United States and Canada, and is widely considered to be the premier men's professional basketball league in t…
Full Answer
What does it mean to own a sports franchise?
Sports franchise means a professional or semi-professional sports franchise, including, but not limited to, a franchise of the National Football League, the National Hockey League, the National Basketball Association, the National League or American League of Major League Baseball, Minor League Baseball, Major League Soccer, the North American ...
What is a successful business model for running a sports franchise?
A successful business model when running a sports franchise at least partially relies on a successful team that attracts a fan base. Some teams have history that keeps fans coming to watch games. Overall, though, a successful team will usually have one of the highest attendances, viewerships, and will sell the most merchandise.
How many professional sports franchises are there in the US?
There are 123 total professional sports teams in the US and the number of billionaires increased by 13% to 2,043 in 2017. How Are Professional Sports Franchises Valued?
Are there any franchised esports leagues?
The following is a list of franchised esports leagues to note: Each franchise may have similar rules, but each differs in format. For example, the Call of Duty League is entirely based on calendar events where a champion is crowned every 2 weeks instead of simple league matches.
What is a professional sports franchise?
Professional sports franchises comprise a distinct market where teams typically sell at prices in excess of what would be expected based on traditional valuation methodologies. Traditional fundamental variables (e.g., profitability or cash flows) do not tend to impact the valuation of professional sports teams as they would other businesses.
How is the value of a sports franchise determined?
The valuation of a professional sports franchise is primarily driven by supply and demand forces. There is a limited supply of teams and a growing number of billionaires (potential buyers) that continue to bid acquisition prices higher as teams become available for sale.
What is the most common valuation method for a sports team?
As noted in this article, the most commonly applied valuation method is the precedent transaction method , and consideration must be given to the facts and circumstances of each precedent transaction in selecting a multiple for the subject team. While the article focused on the most common valuation method for a professional sports team, depending on the league’s salary cap/revenue sharing mandates and team’s local market factors, positive cash flow may be consistently achieved and an income approach could also be applied in a valuation analysis. However, the value of professional sports franchises will continue to depend on the willingness and availability of individuals wealthy enough to pay a significant multiple of revenue to own these “trophy” assets.
What NBA franchises were sold in 2014?
The four sales of NBA franchises from 2014 through 2017 were: the Houston Rockets, Atlanta Hawks, Los Angeles Clippers, and Milwaukee Bucks.
Why do you need to value a sports team?
Additionally, sports teams tend to be owned by individuals with gift and estate tax planning needs that require valuation work. Some additional reasons might include: business reorganizations, shareholder disputes, ...
How many sports teams are there in the US?
There are 123 total professional sports teams in the US and the number of billionaires increased by 13% to 2,043 in 2017.
Which media companies have rights to live sports?
In recent years, alternative media companies, including Amazon, Facebook, YouTube, Twitter, and others, have obtained non-exclusive rights to different packages of live professional sports games to carry on their platforms.
What is a Kinderdance franchise?
Franchisees offer Kinderdance’s innovative “education through dance” programs to thousands of children across North America, teaching at YMCAs, churches, public and private school systems, military bases and community centers, in addition to preschools and child-care centers. #Children's Franchises.
Where are Fleet Feet Sports located?
In 1993, Tom Raynor purchased the company and moved the headquarters to Carrboro, North Carolina. Fleet Feet stores offer measurement, gait analysis and fitting services to help customers find the right athletic shoes, inserts, socks, sports bras and other athletic apparel.
What is Xist Fitness?
Xist Fitness is a unique concept in the health and fitness industry. The state of-the-art club offers the latest fitness equipment, personal training, massage beds, anti-aging red light therapy, and a full service tanning salon including UV-Free tanning! Each revenue stream is a compliment to another providing each member multiple services under one roof.
When did Michael Parrella start Kickboxing?
Michael Parrella opened his first martial arts studio in 1991. In 2009, he used his years of industry experience to start iLoveKickboxing.com, and he began franchising the concept in 2012. ILoveKickboxing now has locations across the U.S., Canada, and in Peru.
What is a franchised league?
In franchised leagues, a central co-ordinator, or in this case, a franchiser, offers a select number of available spots. Each spot in a league comes with a certain price tag. After spending millions to buy into a franchised league, a franchisee will earn the perks of being a permanent member. This includes no relegation together while granting sponsorship and advertising support from the franchiser. Following a regular season of match-ups, points are tallied up to generate a bracket for a final post-season battle to determine the champion.
What is franchising in business?
As a marketing concept, franchising is a business strategy designed for expansion. Franchising has a heavy reliance on marketing and sponsorship, especially the organizations that spend millions to become involved, in order to maintain growth. The concept is easily found outside competitive sports, as exemplified by the fast-food industry.
Why is franchising important?
This is because all franchises, as a common rule, must offer all players to have at least a minimum salary, all work benefits and a cut in the winnings as bound by a contract – a better lifestyle than having to rely on small tournament winnings every now and then. New players will compete with one other to fight their way into the main franchise through lower divisions.
Does franchising work for the NBA?
That’s basically how franchising has worked for the NBA, NHL, MLB and other American sports leagues, where franchised organizations also take up geographical locations to further cultivate a local backing and support and the basis of cultural patriotism, so to speak.
Is franchising a traditional sport?
Similar to our previous episode where we discussed collegiate esports, franchising finds its origin once again in traditional sports. Specifically that of the North American professional scene. To compare, in unfranchised leagues, organizations may participate by earning their way in through promotion. They don’t pay to be involved, so they’re still running the risk of being relegated next season. Also, they do not receiving any additional sponsorship of support from the league coordinators.
Why is running a sports franchise important?
Properly running a sports franchise can help to guarantee a steady revenue stream and a good return on your investment. People do not come to watch games to see the owner, but they also like to know that a competent person is behind the scenes, making sure that the team is successful.
What is a successful business model for a sports franchise?
A successful business model when running a sports franchise at least partially relies on a successful team that attracts a fan base. Some teams have history that keeps fans coming to watch games. Overall, though, a successful team will usually have one of the highest attendances, viewerships, and will sell the most merchandise.
What does it mean to be a happy fan?
A happy fan means another person to buy a ticket or buy a piece of merchandise. Keeping fans happy is essential. Part of doing this is also showing that your team is part of the community. Though you may own the team, fans consider the team a piece of the city.
How do you shape a football team?
Any signings, trades or marketing campaigns will be approved by you. You will shape the team by setting a yearly budget and approving big signings or firings. Since sometimes players do not play well for a team, cutting or trading the player will force the franchise to pay the remainder of the player's contract.
How much does it cost to start an i9 sports franchise?
An i9 Sports franchise owner’s initial investment and franchise start up costs will range from a low of $36,500 to $69,900 depending on the size of territory purchased. It is important to consider that these figures do not include funds that a franchise owner will need for living expenses while starting the business. Learn More.
What is an i9 sports franchise?
An i9 Sports® franchise is a complete system for success providing all of the tools necessary to make each franchise thrive. Your franchise earning potential is truly dependent on your efforts; how aggressively you market, how many sports and venues you offer each season, and the quality of the programs you provide all determine how big your franchise earning potential can be.
When was the first i9 sports franchise sold?
Since our first franchise was sold in 2003, i9 Sports® has given entrepreneurial individuals who have the desire to make a living doing something they love a time-tested way to achieve their dreams.
Who owns i9 sports?
Franchise owner Ted Smith says i9 Sports gives you a way to do good and drive revenue.
Is i9 sports exclusive?
This means that no other franchisee will ever have the right to offer i9 Sports programs within the zip codes you own. Learn More.
Introduction
Economics of Professional Sports Franchises
- While the goal of profit maximization is consistent with any business, the sources of revenue for professional sports teams and operating expenses are unique versus other industries. Certain financial information is reported in the press, mainly Forbes’ annual team valuations; however, the accuracy of this information is unknown and is sometimes disputed by the teams. However, det…
Unique valuation Considerations
- The valuation of professional sports franchises requires consideration of several unique factors that do not exist in most traditional business valuations. Professional sports franchises comprise a distinct market where teams typically sell at prices in excess of what would be expected based on traditional valuation methodologies. A significant reason for this is the limited number of tea…
Professional Sports Franchise valuation Methods
- Generally accepted valuation approaches typically include: 1. The income approach, via the discounted cash flow method, where the value is estimated based on the cash flows a business can expect to generate over its remaining useful life. 2. The market approach, via the comparable companies method and the precedent transaction method, where the val...
Hypothetical valuation of The Portland Trail Blazers
- As an example, I will estimate the hypothetical value of the Portland Trail Blazers through the application of the precedent transaction method. To estimate the value of the Trail Blazers, this section will first review the NBA economic environment, recent NBA team sales, and background on the Trail Blazers. Note that this hypothetical valuation example utilizes only financial informat…
Parting Thoughts
- As noted in this article, the most commonly applied valuation method is the precedent transaction method, and consideration must be given to the facts and circumstances of each precedent transaction in selecting a multiple for the subject team. While the article focused on the most common valuation method for a professional sports team, depending on the league’s salary cap…
Backtracking to Traditional Sports
What Are The Benefits of Franchising in Esports?
- Apart from benefitting organizations due to the removal of any potential relegation, hence, allowing organizations to more easily develop a fan-base, franchising also benefits the players directly competing in the league. This is because all franchises, as a common rule, must offer all players to have at least a minimum salary, all work benefits and a cut in the winnings as bound b…
Where’s The Ceiling?
- As a marketing concept, franchising is a business strategy designed for expansion. Franchising has a heavy reliance on marketing and sponsorship, especially the organizations that spend millions to become involved, in order to maintain growth.The concept is easily found outside competitive sports, as exemplified by the fast-food industry.
The Current State of Franchising in Esports
- As of 2018, the esports industry stuck its first finger into the pie of franchising as Riot Games pursued the concept with its North American League, the NA LCS. As the industry observed the success that the league found, a number of franchised leagues followed, supported by the giant organizations of Blizzard Entertainment and Activision for example. The following is a list of fra…
A Multi-Million Dollar Structure
- As one can imagine, franchising is a multi-million dollar ordeal, which is pushing the esports industry through the roof. The success of a league all depends on viewership, sponsorship and the intake of young talent. For franchisers, committing to a million-dollar league is definitely a huge risk. Until now, esports franchising is yet to catch up with traditional franchising in terms o…