Buffalo Bills for Sale: Are They Really Worth $1.1 Billion?

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Football fans in Buffalo have seen better days. After playing in seemingly every Super Bowl during the early '90s, the Bills are now the least popular NFL team in New York state, and they've experienced nine consecutive losing seasons.

Poor gridiron play hasn't exactly led to financial success, either. Forbes recently named the franchise the league's third least valuable, worth $870 million. With a sale on the horizon, though, new rumors suggest the team could be sold for over $1 billion -- more than the New Orleans Saints, San Diego Chargers and, yes, the Seattle Seahawks. Earlier this week, ESPN's Sal Paolantonio reported "the ownership groups looking at [the Bills] can expect to pay 20% more than the value of the team."

So, could a premium, 10-figure valuation really be possible? There's at least three ways it can come to fruition.

1. The buyer wants to be part of an "exclusive club"
The most obvious parallel is the Los Angeles Clippers, which sold for $2 billion earlier this summer. Steve Ballmer paid an enormous sum for the franchise most had valued at no more than $600 million. The reason for Ballmer's bullishness? If most experts are to be believed, there were few, if any, alternative paths to become an NBA owner. To the former-Microsoft CEO, it was worth paying a premium to "join the club," so to speak.

The same logic applies to the Bills. Like basketball, NFL ownership opportunities are far and few between, and football franchises are arguably a better investment in every sense.

The league oversees the most popular sport in the U.S., Harris reports, and its revenues -- of over $9 billion -- lead all North American sports. In terms of valuation, franchise values have risen 175% since 2000, per Statista. Just as compelling, 30 of the world's 50 most valuable sports teams belong to the NFL, according to Forbes.

2. The team's name is changed
Exclusivity isn't the only way to justify a $1 billion-plus price tag for the Bills, though. As Forbes' Mike Ozanian recently explained, a name change could also do the trick if more sponsors jump on board. Ozanian believes a $20 million boost to the team's sponsorship income might improve its value by $100 million. He writes: 

"With a New York name I bet the Bills could grab some big sponsors. Their current sponsor roster has lots of names, but not much in the way of the big Wall Street and financial firms. The team owns the naming rights to Ralph Wilson Stadium and a sponsor would pay more for a team identified as New York rather than just Buffalo."

The state's two other NFL franchises both sport brands worth an estimated $100 million each. The Bills' brand, by comparison, is worth just a third as much. If the Giants and Jets are the ceiling, there's quite a bit of room to grow in Buffalo, assuming the team can eventually access the entire New York market.

3. The team is relocated
Finally, a relocation is also possible. If new ownership decides to leave town, larger markets like Toronto, London, or Los Angeles are all possible destinations.

Remember, Buffalo isn't exactly a financial wellspring. It lies outside of the U.S.'s 50 largest TV markets, and the Bills regularly fall in the NFL's bottom third in annual attendance by capacity. 

Stiff relocation fees mean an immediate move is unlikely, but the odds Buffalo can keep the Bills worsen with time. The team's stadium lease expires in 2022, and it can opt out at a discount as early as 2019.

What's next? 
With no other NFL franchises on the block in the immediate future, it's reasonable to think a sale will be completed sooner rather than later. The chance to own a piece of America's most popular sport is too good to pass up, whether it's Jon Bon Jovi, Donald Trump, or an unheralded investment group who makes the buy. 

Under the last scenario, rumors suggest L.A. may be the most likely alternative to Buffalo. In an interview with NFL.com, Miami Dolphins owner Stephen Ross recently revealed that "the [league] is very concentrated on getting a team in the L.A. market," and Robert Kraft, the New England Patriots' owner, echoed a similar sentiment when speaking with the LA Times.

Final thoughts
For my money, relocation is the long-term outcome I'm betting on. The NFL has long desired a new franchise in Los Angeles, and it's ludicrous the country's second biggest sports market -- one that's home to two MLB teams, two NBA teams and two NHL teams -- doesn't have its fingers in professional football.

Only time will tell if the Bills will fill the void. But given their mediocrity in Buffalo, it's an option that should be strongly considered by new ownership.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 23, 2014, at 12:50 PM, pondee619 wrote:

    You are aware the the Bills are the only NFL team in New York State, right? They, therefore, are the " least (and most) popular NFL team in New York state."

    "The state's two other NFL franchises..."

    Nope, I guess not. Perhaps an atlas should be on your next gift receiving occasion gift list.

    You may, however, be right on the money with that name thing. Misnaming the Giants and Jets seems to work for them. People can be so easily misled.

    "Buffalo Bills for Sale: Are They Really Worth $1.1 Billion?"

    NO, but, a pro sports franchise is "worth" whatever someone with too much money will pay for a toy. I do not believe that there is a limit.

  • Report this Comment On July 31, 2014, at 10:01 AM, tmac022480 wrote:

    "It lies outside of the U.S.'s 50 largest TV markets, and the Bills regularly fall in the NFL's bottom third in annual attendance by capacity."

    While Buffalo doesn't crack the top 50 largest TV markets....it's the 51st largest...give me a break.

    And bottom third annual attendance by capacity is a 100%, completely false statement.

    Get your tongue out of L.A.'s backside.

  • Report this Comment On September 03, 2014, at 11:58 AM, hmath wrote:

    Clippers are forced into a sale and valuated by Forbes at -$500 million, but get sold for $2 B. With that logic, bills (valued around $1 B by Forbes) should b sold for $4B. A poor NFL market is still a cash cow in comparison to most NBA teams, not to mention a struggling franchise with no control of its own stadium (behind Kings and Lakers). Don't think any sports team should b worth anywhere close to wut they r valued. That said, if a joke team like clippers are sold for $2B cus they're owner is a bigot, who knows wut a ligit NFL, valued at $1B can go for when owner passes away. With that comparison, $1.2 B seems like a steal.

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