In January 1965, Joe Namath, a quarterback from the University of Alabama, signed a contract with the Recent York Jets value for the outrageous sum of $427,000.
It was probably the most lucrative contract ever signed by a rookie — a three-year deal that included an annual salary of $25,000, a whopping $200,00 bonus, a green Lincoln and $30,000 for attorney’s fees.
Cleveland Browns owner Art Modell grumbled that “contracts just like the one Namath got will be the ruination of the sport.”
It didn’t spoil the sport, but within the many years since then, as player salaries rose to insane heights, others echoed the identical sentiment.
Every step up the pay scale spelled doom for the NFL (or NBA or MLB).
So what would Modell and his contemporaries have considered the spending spree that’s underway this offseason? NFL teams have awarded contract extensions as in the event that they are printing money.
Twenty players have received recent contracts which might be each value greater than $70 million, and half of them are value $100 million or far more.
And here’s the part that might’ve probably killed Modell: many of the contracts are fully guaranteed.
Whether or not they run for 10 yards or 1,000, whether or not they miss the season or not, they get their tens of millions.
Quarterback Deshaun Watson, who hasn’t played since 2020 due to criminal accusations, signed a five-year cope with the Cleveland Browns value $230 million — fully guaranteed.
The Los Angeles Rams gave quarterback Matt Stafford a four-year deal value $160 million, $130 million guaranteed.
Quarterback Aaron Rodgers agreed to a three-year, fully guaranteed contract value $150 million with the Green Bay Packers.
Those receiving $100M deals or more consisted of 4 quarterbacks, 4 wide receivers, a linebacker and a cornerback.
The highest 10 deals add as much as $1.5 billion, $962 million of it guaranteed.
Based on Spotrac, there are 25 players who’ve contracts value greater than $100 million. Forty players have contracts value greater than $90 million, and 100 players at $58 million or more.
A lot of the money is guaranteed.
If fans wonder how players can demand such money, possibly they’re asking the unsuitable query.
How can teams afford to pay players a lot money? The reply after all is that those teams are value quite a lot of money.
Based on Forbes, despite a 20% drop in revenue in 2020 due to pandemic, the typical value of NFL franchises rose 14% to $3.48 billion in 2021.
Forbes’ valuations of the teams: Dallas Cowboys $6.5 billion, Recent England Patriots $5 billion, Recent York Giants $4.85 billion, Rams $4.8 billion and Washington Commanders $4.2 billion.
Based on Statista, the typical franchise value of NFL teams from 2000 to 2008 greater than doubled from $423 million to greater than $1 billion.
By 2020 the typical surpassed $3 billion.
Sports is a big business. When someone buys ownership in today’s NFL, they’re not doing it merely because they’re fans; they’re successful businessmen who’re buying in since the return on investment is mind-boggling.
Nuwire Investor did the maths in 2020. The San Francisco 49ers were bought for $13 million in 1977. Their current value is $3.5 billion. That’s a return of 26,823%.
The Giants were purchased for $150 million in 1991. They’re valued at $3.9 billion. That’s a return of two,500%.
The Patriots were bought for $172 million in 1994; their current value is $4.1 billion — a return of two,283%.
The Cowboys were bought for $150 million in 1989; they’re valued at $5.5 billion (now value one other billion) for a return of three,566%.
Yet one more: The Chicago Bears were purchased by the late George Halas in 1920 for $100. Their current value: $3.45 billion — or a return of $3,499,999,900 – or 4,449,999,900%.
Not a foul 102-year investment.
That is attracting the new-money crowd from the business world. Rob Walton, the Walmart heir, is within the technique of buying the Denver Broncos for $4.65 billion.
Steve Bisciotti, who made his fortune via the country’s largest privately owned staffing and recruiting company, bought a component of the Baltimore Ravens in 2000 and one other a part of the team in 2004, for a complete of $900 million.
David Tepper, a hedge fund manager, bought the Carolina Panthers for $2.257 billion.
It’s the identical story in other skilled sports. Steve Ballmer, former CEO of Microsoft, bought the NBA’s LA Clippers.
Dan Gilbert, co-founder of Quicken Loans, bought the Cleveland Cavaliers. Robert Pera, founding father of a global communications technology company, bought the Memphis Grizzlies.
And there are others like them — Mark Cuban, Tilman Fertitta, Shad Khan ….
Steve Kroenke, who married one other Walmart heir (Ann Walton), made his money in real estate development. Now he owns the holding company for not one but nine skilled sports teams (two are within the name of his wife) in soccer, hockey, lacrosse, football (the NFL’s Rams) and basketball (the NBA’s Denver Nuggets).
What other business can promise such extraordinary returns while being recession and pandemic proof.
As for the challenge of operating money, there’s playoff revenue, TV money, merchandise and ticket sales and it’s a cinch to borrow money against equity.
So while teams are paying players seemingly insane amounts of cash to play for them, also they are constructing insane equity.
They’ll afford to pay Rodgers $50 million they usually’re not ruining the sport.