Posted by John Vrooman on Monday, December 18, 2017 in National Football League.

Interview with Charlotte Biz Journal. 

Mike Ozanian of Forbes tells us the current NFL franchise market is soft with 3 to 8 franchises either on the market or coming soon. One fourth of the NFL being placed on the block is a stretch even if league ownership is rapidly aging, but I would agree with 2 clubs that are estate/family owned with older first generation stadiums like the Panthers 1996: Titans 1999 and Bucs 1998. (The new luxury seat venues have a planned economic obsolescence of about 20 years.)

The Titans and Bucs are probably both currently worth about $2 billion compared to the Panthers estimated value of $2.4 billion. In a true monopoly auction these clubs would all probably go for a 25 percent premium, which would put the winners curse premium price at $2.4 for the Titans and Bucs and $3 bills for the Panthers. Given the soft NFL franchise market the monopoly power of the League/Panthers upward bias could drop to the zero to one-sixth (16.6 percent) range.  This would put the winning bid for the Panthers short of $3 billion, with a $2.4 billion min and a max at about $2.8 billion.

It only takes two legit bidders to tip the auction scales, particularly if the two bidders are regional buyers. For example, in the case of the sale of the Buffalo Bills by the Ralph Wilson estate in 2014 there were only two legit bidders (excluding the low ball offer of Donald Trump). The owners of the NHL Toronto Maple Leafs (Maple Leaf Sports and Entertainment) were bidding against the owners of the NHL Buffalo Sabres (Pegula Sports and Entertainment).

The Bills were worth an estimated true value of $1.2 billion, but given the single competition of MLSE, PSE ultimately acquired the Bills for a one-sixth premium price of $1.4 billion (the right tail of the probability distribution). MLSE’s bid was probably around the mean expected value of $1.2 billion (mean of the estimated distribution) with Trump’s low ball $1 billion bid at the left tail of the probability distribution.

V