Chart of the Week #35: Q2 2024 RASFI Update

Arctos recently released the Q2 2024 performance of the Ross-Arctos Sports Franchise Index (“RASFI”), the first-ever purely data-driven benchmark of investment performance of North American sports franchise assets . Sports franchises in RASFI, representing the “Big 4” North American leagues, saw valuation growth of 3.0%, or 12.6% on an annualized basis, in the second quarter of 2024.

RASFI performance through the first half of 2024 was 7.8% (~16% annualized), performing ~300 bps higher year-to-date than the long-term annualized performance for RASFI of ~13%. While 1H 2024 performance represents deceleration in the RASFI index compared to a record 2023 (~27%), it remains in line with the strong performance for the index in 2022 (~16%).

RASFI performance through the first half of 2024 was 7.8% (~16% annualized), performing ~300 bps higher year-to-date than the long-term annualized performance for RASFI of ~13%.

Transaction volume in Q2 2024 displayed a modest decrease in overall control and non-control sale activity in the Big 4 leagues, when compared to 2023 activity. However, we note that closed transactions appear to continue to reflect “new normal” valuations for each league in a normalized, post-COVID environment.

Media rights growth, particularly at the national level, represent a major driver of valuations. These long-term, contracted revenue streams are equally distributed to each team in the Big 4 leagues and represent a significant source of high gross-margin and predictable revenue. The NBA has seen a major surge in valuations over the past few years, driven largely by the anticipated value of the recently-solidified media rights agreements. In early Q3 2024, the NBA finalized their new media rights agreements totaling $76B over 11 years, representing a ~2.6x step-up in AAV from their current deals that are set to end following the 2024-25 NBA season.

We have also seen growth in attendance and viewership for the MLB in 2024, continuing the promising trends that followed the implementation of MLB’s various rule changes in the 2023 season. As of July 2024, attendance in 2024 is up ~2% and, importantly, the average ticket buyer age has declined from 51 years old in 2019 to 44 years old . The coveted 18-35 year-old demographic has grown its share of ticket purchases by 10.5%, a promising trend for the sport.

We continue to see positive tailwinds across the Big 4 North American leagues and are monitoring emerging trends in sale activity moving forward.