Even a mediocre NFL franchise like the Tampa Bay Buccaneers could be worth more than $200 million if it were playing in a new stadium in Baltimore, easily exceeding its value in Tampa by tens of millions of dollars, according to financial estimates.
Orioles managing partner Peter Angelos has said he may be willing to pay up to $200 million for the Bucs -- a mind-boggling figure for a franchise with one of the worst win-loss records and fan bases in sports.
But financial analysts who help investors evaluate franchise values say the figure not only is reasonable, but also could go higher.
"They would be worth not less than $200 million. It could go to $225 million, but that would be stretching it," said Paul Much, a sports finance consultant with Houlihan Lokey Howard & Zukin in Chicago.
Michael Megna, with Megna Valuations in Milwaukee, was more conservative, pegging the value at $175 million to $200 million.
"I don't think he'll pay $250 million. I think that would be outside the realm of reality. But $200 million is doable. Would he do $210 million? I don't know," he said.
The key, according to Megna and Much, is the lucrative stadium deal being offered by Maryland. Funding is in place to build a $165 million stadium adjacent to Oriole Park and lease it on generous terms.
The final design of the stadium could be altered by the team moving in, but preliminary drawings call for 100 sky boxes and 7,500 "club seats," a special category of luxury seats with access to exclusive food service and other amenities. Like Oriole Park, the stadium would be built to maximize concession sales and other revenue.
A lot of that income is exempt under the NFL's revenue-sharing agreement among teams and with the players union, making it all the more important for teams to maximize that revenue.
"The NFL of the future is going to depend on stadium revenues," Much said.
An estimate by The Sun of the likely revenues and expenses of a team playing at the stadium, based on league averages, projections by the Maryland Stadium Authority and guidance from Much and Megna, shows that an NFL franchise playing in the stadium could generate more than $85 million in revenues and nearly $30 million in pretax profits each year.
This would place the team among the most profitable, and valuable, franchises in sports.
Even if the league, as has been suggested by some owners, slaps a hefty relocation fee on a team moving here, the math still suggests a healthy return on a $200 million investment.
"That would be a fair price, a rational business decision," Much said.
If the team earned nearly $30 million in operating profits, a $200 million price tag would produce an annual pretax return on investment of 15 percent -- roughly what corporate investors look for, Much said.
However, the team's actual cost to Angelos would be more, considering the financing, a relocation fee and any legal expenses from the move. Also, the team would have to play at the smaller, and less profitable, Oriole Park for two or three seasons until the new stadium could be completed.
Oriole Park has 72 sky boxes and 5,125 club seats. With temporary renovations, its capacity could be increased for football to about 50,000 -- still about a third less than the 70,000 envisioned for the new stadium. Cutting ticket and luxury seat revenues by a third could cost the team $10 million a year relative to the new stadium.
Angelos declined to say how high he would go in his bid for the Bucs, or reveal his own projections of the team's financial performance, but he acknowledged the advantage the new stadium gives him.
"The commitment of the governor and the legislature for the construction of the Camden Yards complex is key to what we are doing. All of those factors work to Baltimore's advantage and the revenue projections allow us to offer what we are offering," Angelos said.
Analysts frequently apply a "multiplier" to revenue estimates as a way of calculating a team's worth. In the case of an NFL franchise, a multiplier of two to three is common, which would give the Baltimore team a theoretical value of $170 million to $255 million.
"You don't buy these to make pocket money. These are long-term investments," Megna said.
NFL team owners enjoy special tax advantages related to player contracts and can expect a growth in franchise value of about 10 percent a year, Megna said. Each also gets about $40 million a year from network television revenues, which goes a long way toward covering costs.
"The $40 million kicker up front is the big thing. That's why NFL franchises are worth their weight in gold," Much said.
Applying many of these same principles, Financial World magazine this summer estimated the Buccaneers' value at $142 million.
Financial World estimated the Bucs generate about $60 million a year in revenues and an operating profit of $1.6 million. These estimates are based on the team's poor attendance -- the worst in the league -- while the Baltimore estimates assume sellouts.
Presumably, with new ownership and stadium renovations in Florida, the team's value would increase. The team's landlord, the Tampa Sports Authority, is discussing up to $70 million in renovations to the stadium, but no new facility is planned.
"It's hard for me to believe that the Tampa Bay franchise in Tampa would be worth less than $150 million, or $175 million," Megna said.
Much came down on the lower end of the scale, estimating the Bucs' worth at $150 million.
A number of Bucs bidders have pointed to this year's sale of the Miami Dolphins for $138 million as guidance, and noted that the Dolphins are a more successful franchise, playing at a better stadium and in a bigger market. Other recent purchase prices: Philadelphia Eagles, $185 million; New England Patriots, $160 million.
"If Angelos is willing to pay $200 million, whoever buys it locally will have to look and say, 'Can you match that figure?' I'm sure reality would set in at that particular moment," Bob Basham, an executive with the Outback Steakhouse chain who has expressed an interest in bidding on the team, told the St. Petersburg (Fla.) Times this week.
The trustees who are selling the team for late owner Hugh Culverhouse, however, say they may take factors other than price into consideration and hope to keep the team in town. The legal cost and uncertainty of striking a deal contingent upon a move, for example, may give an advantage to in-town bidders, they say.
"We think there are reasons we can do different deals with different people," trustee Steve Story told the Times this week.
Angelos believes the trustees will be obligated by fiduciary responsibility to accept the highest offer.
Megna said he doubts the league will allow the team to leave fast-growing Florida, especially to move to a city so close to another franchise. "Jack Kent Cooke wouldn't like that very much," he said of the Washington Redskins' owner.