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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Perhaps OpenAI aspired to be the Green Bay Packers of Big Tech? The towering economics of the US National Football League are about to become apparent yet again. The sports federation has recently allowed private equity groups to buy passive, minority stakes.
In this frenzy lies the conspicuous anachronism known as the Green Bay Packers. The rural Wisconsin-based team has for a century been organised as a “non-profit stock corporation”. It has sold stock six times to the public over the years, recently raising $66mn in 2022 to improve its historic pitch, Lambeau Field.
But the more than 500,000 current shareholders have no right to dividends nor the ability to sell their shares for capital gains. Their purchases are in effect a donation in exchange for psychic benefits, a commemorative stock certificate and special merchandise catalogue for shareholders. This civic ownership model has worked just fine for a team that has consistently been towards the top of the NFL standings.
One reason for the success is the socialism of the NFL. The Packers release financial statements as part of its quasi-public status. In its most recent year, $400mn of $650mn of revenue came from “national” sources — that is, its cut of the multibillion-dollar television contracts that the league shares equally among 32 franchises. Additionally, the league enforces a strict salary cap on player salaries (this year set at about $250mn).
In recent years, the Packers’ operating profit has hovered between $60mn and $80mn. According to the last balance sheet shared in 2023, the team has a sizeable cash and investments portfolio of nearly $600mn along with a book value of about $900mn.
Last year the Washington Commanders sold in full for $6bn. The upcoming minority stake sales to private equity are expected to imply even juicier valuations. The Packers franchise itself has been valued by Forbes at $5.6bn.
Even as the NFL continues to dominate the American sports landscape, the Packers results show that at least on traditional earnings and cash flow multiples, these valuations are elevated. NFL players are guaranteed 48 per cent of league revenues, an inherent ceiling on profit margins available to team owners.
The Packers articles of incorporation state that should there be a “dissolution” of the team, “the profits and assets of the Corporation must go to community programs, charitable causes and other similar causes”. Profit-motivated “residual” owners of assets is the basis of modern capitalism. The Packers have been able to create competitive and financial success with shareholders happy to instead be paid in the joys of fandom.
