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Volume 21 No. 30
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Will Supreme Court gambling ruling drive up team values? It’s anyone’s bet

Dallas Mavericks owner Mark Cuban made headlines — again — last week following the Supreme Court’s decision to overturn the ban on sports betting when he told ESPN, ”It doubled the value of professional sports franchises in a second.”

 

It may not happen that quickly, but just how much of a boost in value are franchises likely to see from this verdict? There is little doubt that there is new revenue available, including potential integrity fees, betting company sponsorships, and the continued sale of scoring data to third parties that resell to bookmakers.

However, there will also be new oversight costs, and any scandals that corrupt the integrity of the game would likely be harmful to franchise values. There is little reason to expect a quick jump in team values; it was not a factor in the talks that led to the pending sale of the Carolina Panthers for $2.275 billion, sources said.

“This has got to sort its way through the states and federal government,” said Bob Caporale, co-founder of sports mergers and acquisitions boutique GamePlan LLC. “There is a lot to be figured out and it won’t happen overnight.”

No one knows what the economic landscape will look like, he explained, so how can anyone assume there will be a big boost in value?

Sal Galatioto, a sports M&A veteran whose eponymous firm advises on team sales, said the Supreme Court decision at best helps at the margins. “Sellers aren’t looking at the decision and saying teams are worth a lot more,” Galatioto said. “This is not revolutionary.”

And Colin Neville, managing director at Raine Group, is similarly cautious. “I don’t think we will see a huge revenue bump for leagues and teams,” he said. Instead, the real benefit will come from fan engagement, and if that lifts TV ratings then that bodes well for the next round of TV deals for sports leagues, he said.

The leagues so far seem to think similarly. They are worrying publicly about integrity issues and don’t appear to be in a rush to sell gambling sponsorships. In fact, Cuban’s Mavs may not even be allowed to sell such deals because Texas is one of the states that has no plans to legalize sports gambling.

Of course, Cuban is not alone in his thinking. Chris Russo, a sports banker with Houlihan Lokey, is a big believer that the high court decision will cause a gusher of revenue to flow into sports.

“It clearly drives up franchise valuations, and soon,” he said.

Who is right? Maybe there is a bet to be made.