Kansas City Chiefs dominate NFL on the field, struggle to profit off of it
The Kansas City Chiefs are four-time NFL champions yet brought in half as much revenue as the league's richest team.
The Kansas City Chiefs are beating the competition within the NFL like no other.
The football team is ranked first within the NFL power rankings, has won three of the last 5 Super Bowls, and has definitely one of an appropriate quarterbacks the game has ever seen.
Related: 'Monday Night Football' fans sidelined by big media fight
With so many accolades, one would think the Chiefs often is the foremost valuable team within the league, yet it should now not even rank among the pinnacle ten on NFL valuation charts.
In what may surprise many NFL fans, the Chiefs are currently the 18th most advisable team within the league, with a valuation of $6.07 billion and revenue of $590 million as of 2024, in keeping with CNBC.
The Dallas Cowboys, a franchise that has now not won a Super Bowl since 1996, is one of many best-valued franchise with a valuation of $11 billion and annual revenue of $1.22 billion. Kevin C. Cox/Getty Images
The NFL is an all-American billionaire
The NFL is the foremost lucrative sports league within the arena, with an aggregated value of roughly $163 billion and an estimated annual revenue of over $20 billion.
The football league has been a for-profit trade association since 2015 and distributes its revenue among its 32 teams.
"The NFL wants to create total parity and equal competition on the sector, so by the usage of this model, people are more fairly set rather then having wide disparities," said SponsorUnited CEO Bob Lynch to The Boulevard.
The NFL obtains most of its income from national revenue, which contains media rights, merchandise, and licensing contracts.
NFL private equity inclusion game changer
The NFL has been the foremost effective North American sports league to prohibit private equity ownership of any of its franchises, but recently, NFL owners voted to change the league's ownership structure, allowing private equity firms to buy for as much as a 10% stake in a team.
Related: NFL change will make Wall Boulevard more than pleased
The addition of non-public equity ownership may make now not best the NFL even wealthier but also its teams.
"The approval of investments by certain approved private equity funds in NFL teams unlocks an unlimited amount of potential capital for them as valuations continue to upward push and the pool of high-net-worth folks which may give you the money for to place money into teams shrinks. This capital may perhaps be used, among other things, to fund stadium renovations and new stadium development projects," said Partner at Sidley Austin LLP Eric H. Geffner, who makes a speciality of Entertainment, Sports, Media, and Inner most Equity to The Boulevard.
NFL team valuation ranking system
A team's revenue is now not generated in keeping with wins and losses or whether it made the playoffs; it truly has little to nothing to do with how good a team is on the sector.
Probably the most lucrative revenue-generating source for a team is its stadium ownership and operating rights, so if the team would now not own its stadium, its revenue pool is shallower.
"In the same solution to the revenue shared equally among the teams by the league, each team keeps 66% of the ticket revenue from their home games, to boot as all of their local sponsorship revenue. For teams that own their stadiums, they're also ready to generate additional revenue from internet hosting other events (like concerts) at some point of the NFL offseason," said Geffner.
Kansas City Chiefs may devise a lucrative plan to reach the pinnacle charts
Unlike other wealthier teams, the Chiefs don't own their stadium; they pay rent to use Arrowhead Stadium, which is owned by the Jackson County Sports Complex Authority.
The reason is, team is better a tenant, it uses part of its revenue to pay rent and likewise cannot capitalize on the opposite events occurring on the stadium.
While money earned from postseason appearances can boost a team's revenue, the Chiefs best make a fraction of what other teams with their very own stadiums can since the bulk goes to the stadium owner.
Though the Chiefs seriously is solely not going to make money through concessions or by selling luxury suites, they are going to make money by obtaining their very own sponsorships and selling in-house merchandise.
More Entertainment:
- Amazon named in controversial MrBeast lawsuit
- MTV turns to innovative AI for money
In April, the Chiefs proposed renovating Arrowhead, but the stadium owners rejected the request. Now, the Chiefs are debating whether to renew their contract earlier than it expires in 2031 or build their own stadium to generate more revenue.
However it surely, surpassing the net worth of its wealthier counterparts may perhaps be challenging for the Chiefs since team valuations continue to upward push and competition is higher than ever.
"Media contracts best getting larger and bidding for them even more competitive, to boot as long-term locked in contracts around them, I may expect valuations to continue to upward push - especially if the clubs are investing this influx of cash back into the product. The league is pushing not easy internationally, and which suggests new revenue streams and audiences," said Lynch.
Related: Veteran fund manager sees world of pain coming for stocks
What's Your Reaction?
