Sports Isn’t the Next Dot Com Bubble – But Valuation Gravity Has Returned
For more than two decades, professional sports ownership has looked almost immune to gravity. Franchise values rose through recessions, market crashes, and even a global pandemic. Teams outperformed public equities with lower volatility. Scarcity, cultural relevance, and media rights did the heavy lifting.
CNBC’s Alex Sherman recently wrote about how expensive NFL and NBA ownership stakes have become, which for some may trigger a predictable question: Is sports the next dot com bubble?
The answer is no. However, that doesn’t mean today’s prices are risk free.
What we are entering is not a speculative bubble, but a far more nuanced and consequential shift: an era where valuation protection matters as much as valuation growth.
Sports Franchises Are Not Pets.com
The dot com bubble in the early 2000s was driven by fictional demand and unlimited supply. Professional sports are the opposite.
There are only 124 franchises across the four major U.S. leagues. Ownership changes are tightly controlled. Demand is global and permanent. Media rights still underpin real, recurring cash flows. These fundamentals explain why headline valuations continue to break records – and why, in many cases, they still will.
Scarcity is real, structural, and continues to support record-setting prices.
But scarcity alone does not guarantee attractive returns – particularly for buyers entering at or near peak valuation levels. That is a meaningfully different starting condition.
What this means in practice is that ownership groups entering today need investor positioning strategies from day one, not as an afterthought once the transaction closes. How the deal is framed publicly, how league stakeholders are engaged, and how institutional partners understand the return thesis all shape the asset's trajectory before operations ever enter the picture.
From Effortless Appreciation to Active Preservation
For years, the implicit assumption of sports ownership was simple: buy almost anywhere, hold long enough, and value will take care of itself. That assumption is quietly eroding.
Today’s buyers and investors are underwriting deals based on forward looking optimism – future media rights resets, expanding ancillary revenues, and refinancing assumptions that were once taken for granted. At the same time, the cost of capital has reset. Models built around cheap leverage and low rate refinancing face a very different reality, compressing returns even as nominal valuations rise.
The result is a paradox: franchises may remain enormously valuable on paper, while ownership economics become less forgiving and far more sensitive to execution.
The Real “Bubble” Risk
If there is a pets.com risk in sports, it doesn’t belong to a specific league or iconic franchise. It lives in business models and assumptions.
The most exposed sports assets tend to share familiar characteristics:
• Heavy reliance on local or regional sports networks as cord cutting shifts churn risk from distributors to teams
• Valuations anchored to future media rights optimism rather than current cash yield
• Capital structures dependent on refinancing conditions that no longer exist
• Political and community optics that turn billion dollar transactions into public flashpoints
The political and community dimension deserves particular attention. A transaction that triggers public opposition or regulatory scrutiny can constrain ownership strategy for years, compressing optionality at the exact moment a new owner needs maximum flexibility.
None of these factors will collapse franchise values on their own, but collectively, they narrow the margin for error.
A Two Tier Sports Economy Is Emerging
One of the least discussed consequences of this moment is the emergence of a two tier sports economy.
A small group of global brands – teams with international reach and cultural dominance – will continue to command premium multiples. Scarcity and brand power protect them. But the longer tail of franchises will increasingly be judged by traditional cash flow discipline. For these teams, growth will depend on execution: direct to consumer strategies, real estate development, betting partnerships, and operational rigor that can outpace rising capital costs.
What separates franchises that execute these strategies from those that talk about them is rarely financial capacity. It is alignment. Direct-to-consumer pivots, real estate developments, and betting integrations all require internal coherence, regulatory navigation, and a public narrative that moves at the speed of the commercial strategy. Franchises that cannot maintain that alignment tend to lose institutional confidence quietly, well before a deal falls apart, or a revenue target gets missed.
Valuation Risk Is Often a Narrative Problem
What is frequently missed in the valuation conversation is that risk rarely announces itself as a financial problem at the outset. In practice, it often appears first as a narrative or governance problem.
Having worked at the intersection of sports, media, and capital, we have seen franchise value preserved – or quietly impaired – long before revenue projections changed. Misaligned investor expectations, unclear ownership strategy, regulatory friction, league level tensions, or public skepticism around governance can all constrain strategic flexibility well ahead of any balance sheet impact.
At today’s prices, communications strategy is no longer downstream from financial strategy. It is inseparable from it.
The pattern is recognizable. A minority investor enters with institutional return expectations shaped by a private equity mental model. League governance introduces friction to the buyer underweighted in diligence. The ownership narrative fractures, often publicly and prematurely. Capital costs rise, strategic options narrow, and the asset reprices before a single revenue line has changed. Financial impairment is real, but the communications failure preceded it by months.
Sophisticated ownership groups increasingly treat communications, stakeholder engagement, and governance alignment as risk management disciplines – especially as minority stakes, institutional capital, and private equity participation introduce new audiences who evaluate franchises not just as teams, but as long duration financial assets.
The New Competitive Advantage
Historically, franchise values rarely declined, even amid poor performance or controversy. But that history was written in a world of falling interest rates, linear media growth, and limited public scrutiny. That world is changing.
In today’s environment, the competitive advantage no longer lies solely in access to scarce assets. It lies in the ability to manage complexity after the transaction closes—integrating financial strategy, league governance, investor expectations, and public narrative into a coherent operating model.
The Bottom Line
Sports is not the next dot com bubble. There will be no mass extinction of franchises or collapse in demand.
But the era of effortless appreciation is over.
Scarcity will keep prices high. Gravity has returned. And value will increasingly accrue to owners who recognize that protecting franchise value – financially, reputationally, and politically – is now as important as growing it.
In today’s market, that integration may prove to be the most durable asset of all.
Jon Hammond is Principal and Head of Media, Sports, Entertainment, and Technology at Sloane. He leads the firm’s cultural strategy offering, advising clients on how to harness storytelling, influence, and innovation to drive growth and deepen engagement.
Zack Mukewa is Principal and Head of Capital Markets & Strategic Advisory, advising companies and their financial sponsors on equity positioning, investor communications, and transaction strategy.
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