John Riordan: Snyder takes the money and runs in ground-breaking week for US sports business
It has been a busy week for American sports business, lucrative and groundbreaking, both figuratively and literally.
Over the past eight days, an NFL team became the most expensive sports franchise in US history and an NFL quarterback (at a rival outfit, no less) was handed what could end up being the most lucrative contract ever inked by an active player.
And as if to accentuate all of this punting for the risk/reward of high return, the home of high rolling gamblers, the city of Las Vegas, signed a deal to poach yet another professional team.
All three of these deals will have to overcome the sort of hurdles you’d expect from million- and billion-dollar agreements but the upshot is bright for the Washington Commanders, Jalen Hurts and the Oakland A’s, a baseball club that has moved between cities before and will be known as the Las Vegas A’s by the end of this decade.
The intricacies of the $6bn deal that will take the Washington Commanders off of the hands of Dan Synder is being led by serial sports owning tycoon, Josh Harris.
Harris is a homecoming hero who grew up in the so-called DMV, the extensively populated city and suburban area covering DC and its Virginia and Maryland environs. That football-loving populace breathed a deep sigh of relief when news came through that a native-born billionaire had rounded up enough of his super-rich brethren to convince the unpopular Snyder to move along.
The last time the Washington NFL franchise won a Super Bowl was the 26th edition just over 31 years ago when they beat the Buffalo Bills. They didn't know it then but it was the final salvo of a golden era.
Mired in controversy for most of the time since he took over in 1999, Snyder will exit with a considerable profit for his troubles, having bought the then-Redskins from the estate of the late Jack Kent Cooke in 1999 for a reported $800 million.
Mediocrity and scandals is his legacy, aside from a well cushioned retirement fund at the relatively young age of 58. He was fortunate to have carved out his piece of the NFL at the perfect moment.
I’m not sure if he could have envisaged at the turn of a new century that the NFL was about enjoy a couple of golden decades, cementing its place as the nation’s most powerful television attraction while the league’s shared revenue structure assured the huge media rights deals would give every owner an incredible windfall no matter how badly their team was performing.
There’s no end to the good times in sight and it’s easy to see why investors would be drawn in by a situation where there is a secure $115bn in long-term media rights deals with the major US television networks and tech giants, including Amazon and Google’s YouTube TV, through 2033.
While ratings fall everywhere else, the NFL can promise rights buyers and advertisers that the only way is up.
Harris is no stranger to lucrative rights deals that outsize the performance of the individual components. He is also a part owner at Crystal Palace so he will have no reason to shy away from the dire performance of Snyder’s Washington football team since ‘99; they made the playoffs just six times in 24 seasons, never advancing past the divisional round.
And, of course, the Premier League benefits from a deeper risk that American sport will never endure: the relegation that is part of its charm for the neutral is not a negative in the world of the NFL.
He does however take over a ramshackle project with public relations reconstruction needed as an immediate priority. Recent years have brought accusations of widespread workplace sexual harassment along with investigations into alleged financial fraud with some NFL owners publicly advocating for Snyder to go. In the league without any possibility of a ship ever fully sinking, this has been a good week for what you would normally view as rivals; the rising tide of a team with better fortunes actually lifts them all up.
Forbes estimated last year that the Commanders were worth $5.56bn, ranking sixth among the 32 NFL teams (with an average value of $4.47 billion). Synder's asking price was understandably, given the nature of the man, a half a billion above that.
Harris and his investors have to pay money to fix the team and its brand on and off the field and they’re not taking over a team with a long season ticket waitlist. Washington averaged 58,106 fans per game over nine home games at the 67,617-seater FedEx Field last season, the lowest in the NFL.
And yet, you would be hard pressed to find anyone claiming that Harris and co overpaid. Taxpayer stadium subsidies and a federal tax rule instituted in 2004 that allows new owners to write off much of their purchase prices against team profits over 15 years continues to add value upon value.
Snyder had plans for a new stadium to replace FedEx Field, which opened in 1997, but had trouble securing public funding. Maybe the group’s decision to buy and lift up a downtrodden sports team will soften local government attitudes and maybe Harris’ positive record in terms of PR and facility building at his other plaything, the NBA’s Philadelphia 76ers, will sweeten the prospect of a new home.
Also helping boost the value is the fact that Washington plays in the NFC East alongside arguably the most attractive brands in the league; the Dallas Cowboys, the New York Giants and the Super Bowl runners up, the Philadelphia Eagles.
There was competition from the likes of Jeff Bezos which probably added to Synder’s demands but nothing unexpected for an 30-year investing machine like Harris who made his money at Apollo and has retired from the grind to happily enjoy the sports world with Harris Blitzer Sports & Entertainment as well as philanthropic work in many of his areas of interest.
This was likely his one shot at the NFL whose teams are the most valuable US sports properties, partly because they don’t often land on the market. Only four clubs have changed hands in the past decade: the Denver Broncos ($4.65bn, 2022), the Carolina Panthers ($2.27bn, 2018), the Buffalo Bills ($1.4bn, 2014), the Cleveland Browns ($1.05bn, 2012), and the Jacksonville Jaguars ($760m, 2012).
All of the above logic can be easily used for the big payday secured by the Philadelphia Eagles quarterback, Jalen Hurts. All going well for the 24-year-old, by the end of the five-year deal he agreed to Monday, he will have earned just over $50m a year. That’s a new high water mark.
He is of course an even bigger target for hungry tacklers on the other side of the ball and if he succumbs to a career threatening injury, he’ll earn less than he signed for. But he won’t go hungry, let’s not overthink it.
The NFL is an interesting place. Players get a special joy out of seeing their fellow professionals securing the generational wealth they are all striving for. It’s not just the success of the gain, it’s also driven by a fear of loss.
Hurts is still new to the league and he has already led his team to the Super Bowl. Most of the time, it goes dramatically the other direction, particularly at the specialised role in which he excels.
Next week, the NFL Draft will take place in Kansas City and a whole new cohort of young athletes will be showered with million-dollar contracts. For all the doom and gloom about the US economy, there seems to be no stone unturned in lavish sports spending.
