To Buy Denver Broncos, Rob Walton Outbids All Other Rivals By At Least $400 Million

The purchase of the Denver Broncos by Rob Walton sets a new benchmark for the sale of a sports team: $4.65 billion. I wrote on Monday that Walton would snap up the NFL team for about $4.5 billion. The sale is pending approval of at least 24 NFL owners.

The deal price, first reported by Mike Klis of Denver’s 9News, is 45% more (29% adjusted for inflation) than the $3.2 billion Joe Tsai paid for the Brooklyn Nets in 2019. The new ownership group also includes Walton’s daughter Carrie Walton Penner; her husband, Greg Penner, who is the chairman of WalmartWMT
and founder of Madrone Capital Partners; and Mellody Hobson, the co-CEO of Ariel Investments.

The $4.65 billion price tag is also 25% more than Forbes’ $3.75 billion valuation of the Broncos in August 2021 and illustrates two points.

The first is that when an incredibly rich individual wants a team, price (as measured by the price/revenue multiple) is of little concern, especially when there are no other individuals with comparable wealth in the bidding. Walton’s net worth—$58 billion, according to Forbes estimates—is ten times greater than that of Apollo Global Management cofounder Josh Harris, the richest of his bidding rivals. A source familiar with the negotiations tells Forbes that no other bid had secured financing that exceeded $4.2 billion. Aside from Harris, the other bids were headed by billionaire Jose E. Feliciano, a founder of Clearlake Capital, and mortgage mogul Mat Ishbia.

The same bigfooting happened in 2014 when Steve Ballmer plopped down $2 billion—almost 14 times revenue—for the NBA’s Los Angeles Clippers. I can still recall being on a sports panel at a conference hosted by Gabelli Funds shortly after that deal where the attorney who had represented seller Rochelle Sterling told the audience that Ballmer didn’t even look at the books of the NBA team and simply asked, “What do I have to pay to end the auction?” No other offers for the Clippers were within $500 million of Ballmer’s bid.

The second point is that, buyers aside, the multiples being paid for sports teams continue to climb, in part because there’s an expectation that revenue and profits will keep increasing and also because the value of sports teams isn’t correlated with the economy or the stock market, making them an attractive way for the wealthy to diversify their portfolios.

In real terms, the NFL team sale prices have increased more than fivefold the past two decades, versus a little more than a threefold increase for the stock market (including reinvestment of dividends).