There are 1,645 billionaires in the world, including 540 Americans -- give or take a few based on this week’s stock portfolio performance.
There are 122 franchises in the "big four" sports leagues and the recent price tags fetched on the open market are astounding.
For reference, the Buffalo Bills were sold for $1.1 billion to the Pegula Family in 2014. The late Ralph Wilson paid $25,000 for the team in 1959 as the Bills original owner in the AFL.
Similarly, Walter O’Malley bought controlling interest in the Brooklyn Dodgers for $346,000 in 1950. His son Peter sold the Los Angeles Dodgers to News Corporation owned by Rupert Murdoch for a reported $350 million in 1998. News Corp. then sold to Frank McCourt for $420 million in 2004. Balancing on the brink of baseball bankruptcy, McCourt sold the team to a group led by Mark Walter of Guggenheim Partners for a record $2.15 billion in 2012.
This transaction sent shock waves through the world of sports franchise commerce. Every team owner went to sleep with a huge smile on their face that night.
Forbes Magazine has cornered the market in the inexact science of economics in the valuation of professional sports teams and leagues. They recently attached a price tag of $36 billion for Major League Baseball. According to the Forbes numbers, the average baseball team is worth an average $1.2 billion with a 48 percent increase in value from last year. The New York Yankees top the Forbes baseball list at $3.2 billion.
Closer to home the Giants ranked fourth on the Forbes list at $2 billion dollars. This represented a 100 percent increase in the team’s value from last season. The Oakland A’s were 27th at $725 million representing a 46 percent increase.
[RELATED: List: Forbes' MLB franchise valuations]
The "Billionaire Ballers Club" continues to add members on a global basis. Soccer powerhouse Real Madrid is numero uno in franchise value at $3.45 billion.
How do these Forbes sports numbers relate to other sectors in the business world? Thirty-year-old Facebook founder Mark Zuckerberg is worth $28.5 billion. UBER -- without network partners, sponsors, stadiums or players -- is worth $41 Billion. And the Giants stadium naming rights partner -- AT&T -- comes in at a cool $127 billion.
There are many types of appreciation in sports. We have our favorite players, teams, great moments, broadcasters and leagues. But the most important appreciation is the bottom-line explosion exemplified by skyrocketing value of sports franchises.
After speaking with several sages in the world of franchise transactions, there are three significant market forces fueling the engine for these eye-popping deals:
1. Media values: Media values continue to increase the competition for sports content. Just wait until the global tech giants start to recognize the magnet that sports franchises have for the hearts, minds, credit cards and mobile devices of an expanding global audience. The hardware suppliers will always require fresh software. And sports software (read: game broadcasts) performs year round and is growing globally.
2. Low interest rates: Money is close to free these days and those that deal with it without fear are riding high in many business-acquisition sectors, including sports. The billion dollar barrier has been cleared and we will continue to see transactions that don’t seem to make bottom-line sense.
3. Wealth creation: Wealth creation is exploding, not just in the United States but across the world. Business innovation and increases in productivity are key drivers. Do the math. More money means more buyers for sellers who can realize levels of ROI that are OTM (Over The Moon). We see Americans owning global soccer teams and a Russian Oligarch buying an NBA team in Brooklyn (which he is now selling).
Luxury collectibles are now considered intelligent investments for significant appreciation. Jewelry, antique cars, artwork, coins and stamps are selling at record prices. Classic cars have had a 10-year price change of 430 percent appreciation. Rare stamps and coins are up by 225 percent. What could be more luxurious than buying a professional sports franchise?
If you think all of these stratospheric prices seem fishy, a Japanese restaurateur paid $1.76 million for a 488-pound bluefin tuna at the Tsukiji fish market auction. That's around $3,600 per pound. Sushi this!
Sports franchise appreciation is the gift that keeps on giving and our collective jaws will continue to drop as the prices keep rising in 2015 and beyond.