March 2023

A Better Return? Pro Sports, The S&P 500, or Real Estate?

Professional sports teams have long been considered a coveted investment due to their potential for significant growth in value over time. The world of sports is known for its lucrative television contracts, sponsorships, and merchandise sales, all of which can lead to substantial increases in team value. But just how much value do these teams gain, and is investing in a sports team a wise financial decision compared to other investment options like real estate and the S&P 500?

According to Forbes' annual valuations of professional sports teams, the average NFL team has increased in value from $1.43 billion in 2010 to $3.48 billion in 2021, representing a nearly 143% increase in value over 11 years. The average NBA team, on the other hand, has increased in value from $369 million in 2010 to $2.2 billion in 2021, representing a staggering 495% increase in value over the same period. Similarly, the average MLB team has increased in value from $487 million in 2010 to $1.93 billion in 2021, representing a 296% increase in value.

These numbers clearly demonstrate the potential for significant value appreciation of professional sports teams over time. However, investing in a sports team is not without its risks. Unlike other investment options, the value of a sports team is heavily reliant on the performance of the team itself, as well as the league it is a part of. A poor performing team or a league with declining viewership can quickly result in a decrease in team value.

In comparison, investing in real estate has historically been seen as a more stable and reliable investment option. While the value of real estate can fluctuate based on market conditions, real estate investments generally provide a steady stream of income through rent or lease payments, and the property itself can appreciate in value over time.

The S&P 500, a stock market index that tracks the performance of 500 large companies listed on stock exchanges in the United States, has historically provided investors with a reliable return on investment, averaging an annual return of around 10% over the long term.

In conclusion, investing in a professional sports team can potentially provide significant returns on investment over time, but comes with greater requirements to actually make investment unlike the other investment options like real estate and the S&P 500. Investors should carefully consider becoming a billionaire or extremely wealthy individual to be invited to an investment group capable of purchasing a sports team, along with assessing their individual goals and risk tolerance before deciding to invest in a sports team.

This is not to be used or construed as being financial advice, and truth is one cannot just "invest" in a sports team. This opportunity is not available to the general public and you must first qualify to purchase or invest in one and unless you're a billionaire you're likely not taking your financial advice from JoxStox and already have enough risk tolerance and experts at your disposal to make a wise and informed decision.


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