The Kansas City Chiefs are beating the competition in the NFL like no other.
The football team is ranked first in the NFL power rankings, has won three of the last five Super Bowls, and has one of the best quarterbacks the game has ever seen.
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With so many accolades, one would think the Chiefs would be the most valuable team in the league, yet it doesn't even rank among the top ten on NFL valuation charts.
In what may surprise many NFL fans, the Chiefs are currently the 18th most valuable team in the league, with a valuation of $6.07 billion and revenue of $590 million as of 2024, according to CNBC.
The Dallas Cowboys, a franchise that has not won a Super Bowl since 1996, is the highest-valued franchise with a valuation of $11 billion and annual revenue of $1.22 billion.
The NFL is an all-American billionaire
The NFL is the most lucrative sports league in the world, with an aggregated value of approximately $163 billion and an estimated annual revenue of over $20 billion.
The football league has been a for-profit trade association since 2015 and distributes its revenue among its 32 teams.
"The NFL wants to create total parity and equal competition on the field, so by using this model, everyone is more fairly set instead of having wide disparities," said SponsorUnited CEO Bob Lynch to The Street.
The NFL obtains most of its income from national revenue, which includes media rights, merchandise, and licensing contracts.
NFL private equity inclusion game changer
The NFL has been the only North American sports league to prohibit private equity ownership of any of its franchises, but recently, NFL owners voted to change the league's ownership structure, allowing private equity firms to buy up to a 10% stake in a team.
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The addition of private equity ownership might make not only the NFL even wealthier but also its teams.
"The approval of investments by certain approved private equity funds in NFL teams unlocks an enormous amount of potential capital for them as valuations continue to rise and the pool of high-net-worth individuals who can afford to invest in teams shrinks. This capital can be used, among other things, to fund stadium renovations and new stadium development projects," said Partner at Sidley Austin LLP Eric H. Geffner, who specializes in Entertainment, Sports, Media, and Private Equity to The Street.
NFL team valuation ranking system
A team's revenue is not generated based on wins and losses or whether it made the playoffs; it actually has little to nothing to do with how good a team is on the field.
The most lucrative revenue-generating source for a team is its stadium ownership and operating rights, so if the team doesn't own its stadium, its revenue pool is shallower.
"In addition to the revenue shared equally among the teams by the league, each team keeps 66% of the ticket revenue from their home games, as well as all of their local sponsorship revenue. For teams that own their stadiums, they are also able to generate additional revenue from hosting other events (like concerts) during the NFL offseason," said Geffner.
Kansas City Chiefs might devise a lucrative plan to reach the top charts
Unlike other wealthier teams, the Chiefs don't own their stadium; they pay rent to use Arrowhead Stadium, which is owned by the Jackson County Sports Complex Authority.
Since the team is only a tenant, it uses part of its revenue to pay rent and also can't capitalize on any other events happening at the stadium.
While money earned from postseason appearances can boost a team's revenue, the Chiefs only make a fraction of what other teams with their own stadiums can because the majority goes to the stadium owner.
Although the Chiefs can't make money through concessions or by selling luxury suites, they can make money by obtaining their own sponsorships and selling in-house merchandise.
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In April, the Chiefs proposed renovating Arrowhead, but the stadium owners rejected the request. Now, the Chiefs are debating whether to renew their contract before it expires in 2031 or build their own stadium to generate more revenue.
However, surpassing the net worth of its wealthier counterparts might be difficult for the Chiefs since team valuations continue to rise and competition is higher than ever.
"Media contracts only getting larger and bidding for them even more competitive, as well as long-term locked in contracts around them, I would expect valuations to continue to rise - especially if the clubs are investing this influx of cash back into the product. The league is pushing hard internationally, and that means new revenue streams and audiences," said Lynch.
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