Wednesday, July 2, 2008

Most Valuable Brands in Sports

ESPN takes the top spot among sports businesses with a brand value of $7.5 billion. Business brands are valued based on the amount by which their market value exceeds their book value relative to the industry norm. Last year, ESPN amassed an estimated $6 billion in revenue thanks to their growing stable of five domestic networks (including Spanish offering ESPN Deportes), regional syndication service, magazine, Web site and international platforms. The network normally has an operating margin of 23%, giving it operating income (in essence, earnings before interest, taxes, depreciation and amortization) of $1.4 billion. ESPN's estimated market value of $22 billion is $7.5 billion more than a network without the ESPN name would be worth.

Nike comes in second among sports business brands with a value of $5.6 billion. The 2008 Olympics in Beijing will allow Nike to show off its swoosh logo and enhance its brand in Asia, which represents a huge opportunity for growth.

We value the Manchester United brand at $351 million, which represents 24% of the team's enterprise value (equity plus net debt). ManU's brand value includes portions of their $94 million in annual sponsorship revenue and $70 million television rights fees. Observation: Soccer's Real Madrid and Bayern Munich are worth, in their entirety, $1 billion and $838 million, respectively, vs. $1.2 billion for baseball's New York Yankees.

But Real and Bayern have higher brand values ($288 million and $255 million, respectively) than the Bronx Bombers ($217 million). This is because a higher percentage of Real and Bayern's revenue are derived from sources they do not have to share with other teams from their home countries (merchandise), or revenue sources they have to share less of than the Yankees do with their rivals (television).

taken from Forbes

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