Raiders’ value expected to soar after Broncos’ record sale

The Denver Broncos’ sale has not even been formalized, and it’s already having an impact on NFL franchises, including the Raiders.

A group headed by Walmart heir Rob Walton, his daughter, Carrie Walton Penner, and her husband, Greg Penner, has agreed to purchase the Broncos for $4.65 billion, the highest sale price for any sports franchise in North America.

NFL approval should take place within three months and is expected to be a formality.

That amount of money is sure to accelerate the dramatic rise in franchise values, triggered by massive media rights deals and increasing revenue streams from sources such as sports betting.

This by no means is to suggest that Mark Davis, the Raiders’ controlling owner and managing general partner, has any plans to sell the franchise. It’s a family business for Davis, whose father, Al, purchased a 10 percent stake in the team for $18,000 in 1966.

The Davis family is synonymous with the franchise, and business picked up with the influx of capital generated by a favorable stadium deal that drew the Raiders to Las Vegas and the ancillary income that came with it.

Davis, who did not return a request for comment on this story, has immersed himself in the community and given no indication he would want to sell the team.

But one league source indicated a potential sale price could be as high as $5 billion. Another suggested the team could fetch significantly more on the open market.

Any potential decision to put the team up for sale would come with complications.

First, there are minority shareholders. There is also the matter of the “flip tax” built into relocation agreements and constructed to discourage owners from orchestrating moves to more profitable locales simply to drive up value and sell immediately, though that penalty will drop over time.

So Davis should continue to be the primary beneficiary of a business rapidly gaining in profit with no end in sight.

In 2018, Forbes listed the average NFL franchise at a value of $2.57 billion. That number increased to $3.5 billion by 2021 despite two seasons impacted by the COVID-19 pandemic.

The average franchise saw an increased valuation of 14 percent from 2020 to 2021 on the strength of a new round of digital rights deals. It was the largest jump in five years, and the Dallas Cowboys drew a valuation of $6.5 billion, the highest in all of sports.

Factors such as market size, stadium revenue, future opportunities and branding are all part of the equation, and with a great deal of the money split in the league, the rising tide truly lifts all boats.

Another significant increase is expected when Forbes releases its annual list this year, based at least in part on the price paid for the Broncos.

The Walton-Penner group reportedly could have secured the team for $4.2 billion, with the extra cost going to ensure an expedited process.

But even the $4.2 billion price tag represents a 12 percent increase over the franchise’s 2021 estimated valuation of $3.75 billion.

That alone should bump the value of each team by approximately that same rate this year.

The Raiders were in the middle of the pack last year with a valuation of $3.415 billion, 16th in the league.

Absent any other factors, that would put the Raiders at a valuation of $3.825 billion. It would represent an astronomical rise over 20 years since the team was valued at $421 million in 2002.

One more immediate benefit of the rise in value for the Raiders could relate to the on-field product.

The continued influx of cash expected over the next several years could give them more flexibility in terms of contract structures.

Contact Adam Hill at ahill@reviewjournal.com. Follow @AdamHillLVRJ on Twitter.