Does Panthers sale offer any clues for the future?

The laboring sale of the Carolina Panthers will be remembered for the unique circumstances that led to the sale and the rumors that surrounded it. But it was the eventual deal price that perhaps will be its lasting legacy, as the new record for an American pro sports franchise still fell far short of expectations and led some to wonder if the decades-long, dramatic run-up in sports franchise values is beginning to level off.

The $2.275 billion price being paid by hedge fund magnate David Tepper tops the $2.2 billion that the Houston Rockets went for last September, and it marks a 63 percent increase from the $1.4 billion paid for the Buffalo Bills in 2014, a sharp increase in just four years, a period that contained significant controversy for the league and no singular revenue-driving event, like a major new TV rights deal.

But many insist the final terms fell far short of original projections — and the price is actually slightly less, as $75 million is deferred, meaning the value of that amount is lower in current dollars.

At the Super Bowl in February there were whispers that Panthers owner Jerry Richardson, who put the team up for sale after allegations of workplace misconduct emerged in December, was seeking at least $3 billion for the team he has owned since its debut in 1995.

So why didn’t the deal come in even higher? Part of the answer is structural: The NFL shares up to 80 percent of its revenue. Big-market teams in other leagues can rely on local TV riches to boost franchise value, but the NFL cannot.

But the primary issue cited by insiders was the exorbitant price tag, and the fact that there are only so many billionaires to go around. Steve Ballmer, who bought the Los Angeles Clippers for $2 billion in 2014, and Tilman Fertitta, who bought the Rockets, had the resources to pull those deals off. Not many people can — or are willing to — do the same. Tepper was one who could.

In fact, the high offer of $2.6 billion came from South Carolina consumer lender Ben Navarro, who was the favored bidder by many of the current Panthers executives because of his Carolina ties and the belief that he would stay the course initially on team operations. But Navarro did not have enough money to afford the club on his own and was still raising cash when the process closed, multiple sources said. In fact, Navarro several times approached the NFL about bending its ownership rules to accommodate his equity-light offer, sources said.

The limit of high-end buyers was cited in April at the World Congress of Sports when sports investment banker Sal Galatioto warned, “When I started you could buy a team for $60 million. Now it costs that for a front-row seat. Trees don’t grow to the sky. At some point they’re going to level out.”

David Teppergetty images

Contacted last week, Galatioto said the Panthers price landed where he felt it should have.

Each of the four major pro sports leagues in the U.S. limit debt and the number of investors, and ban corporate ownership. Unless that changes, it’s tough to see the prices going much higher in the future except if a brand-name team like the Chicago Bears or Dallas Cowboys is sold.

“Given the equity requirements for the controlling owner by the leagues, at some point you are capping the number of potential buyers,” said Colin Neville, a managing director with Raine Group, which advises on the sale and purchase of sports teams.

To be sure, team sales are case by case. If a team hits the market in an area where a high number of uber-wealthy people reside, then the price can go higher. That was not the case in Charlotte.

Tepper, a Pittsburgh native and a minority owner of the Steelers, is known as a disciplined investor, and he refused to bid beyond what he felt the Panthers were worth.

One banker close to the process suggested half-in-jest that only a Ballmer clone facing off against Tepper could have pushed the price skyward.

Indeed, unless an economic rush generates a new generation of billionaires, people may look at the Panthers sale as the first, key indication that franchise values may have peaked.