President Donald Trump’s Tariffs aggressive tariff policies have unsettled financial markets and raised concerns about a potential recession in 2025. The S&P 500 has experienced significant volatility, with economists warning of a looming economic downturn. Yet, amid this uncertainty, sports team owners remain remarkably insulated from these market shocks.
Historically, the valuations of franchises in Major League Baseball, the NBA, the NFL, and the NHL have continued to climb even during economic downturns, buoyed by long-term media contracts, loyal fan bases, and the scarcity of professional teams.
While game-day revenues may fluctuate with consumer spending, the overall value of sports franchises tends to defy broader economic trends. This resilience offers a rare haven for investors, even as tariffs and market volatility rattle other sectors.
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Pandemic Fallout: A Revenue Plunge but Rising Valuations
When the Boston Red Sox took the field for a delayed 2020 Opening Day, Fenway Park was eerily empty. No roaring crowds, no bustling concession lines, no merchandise shoppers. This was the stark reality across Major League Baseball and other global sports leagues amid the Covid-19 pandemic.
The financial impact was severe. The Red Sox’s revenue plunged nearly 71%, from $519 million in 2019 to $152 million in 2020, with the MLB average dropping from $346 million to $122 million, according to Forbes. Yet, franchise valuations told a different story. Between 2020 and 2021, MLB teams increased in value by 3% on average, climbing further by 9% the following year. The Red Sox outpaced this growth, reaching an estimated $4.8 billion in 2024, ranking third in baseball.
Tom Werner, billionaire chairman of Fenway Sports Group, which owns the Red Sox, NHL’s Pittsburgh Penguins, and Premier League’s Liverpool FC, explains:
“You had to fasten your seatbelt and know that in the short run you’re going to take a financial hit. But that’s part of being an investor. Everything took a hit during Covid, and you just have to ride it out and be patient.”
Navigating Uncertainty Amid Tariffs and Market Volatility
As investors brace for another uncertain year, President Donald Trump’s tariff policies have contributed to market instability. The S&P 500 slid 15% before a partial recovery, and economists at JPMorgan and Goldman Sachs are forecasting a significant risk of recession in 2025.
Yet, sports franchise owners remain in a strong position to weather the storm. Historically, team valuations in the four major North American leagues either hold steady or appreciate during economic downturns.
Werner cautions against labeling sports franchises “recession-proof,” noting the financial challenges during the pandemic, including significant operating losses. For example, the Red Sox’s EBITDA swung from $89 million positive in 2019 to a $70 million deficit in 2020.
Resilience Through History: Franchise Values Defy Economic Headwinds
Despite occasional setbacks, sports franchises have demonstrated remarkable long-term growth. Since Forbes began tracking team values in 1998, average franchise values have soared roughly 2,000%, far outpacing the S&P 500’s returns.
The Ross-Arctos Sports Franchise Index, which measures team valuations from 1960 to 2024, reveals only 39 quarterly declines in over six decades, with a compound annual growth rate of 13%—nearly double that of the S&P 500.
Key to this stability are long-term contracts for media rights, sponsorships, and premium seating, which lock in revenues years in advance. For instance, NBA teams earned approximately 12% of their revenue from luxury suites in the 2023-24 season, while national TV deals accounted for 35% in the NBA and 60% in the NFL, with contracts extending well into the next decade.
Scarcity, Fan Loyalty, and Emotional Investment
With only 124 franchises across the four major leagues, scarcity plays a vital role in driving franchise values. Billionaire investors compete not just on numbers, but on passion.
Dallas Mavericks minority owner Mark Cuban notes,
“Over the long term, the scarcity and fun value will always be up and to the right.”
While there have been exceptions—such as the NBA’s purchase of the New Orleans Pelicans during the financial crisis—these instances still resulted in substantial returns for previous owners. The Pelicans, for example, have since increased in value from $318 million to over $3 billion.
Game-Day Revenues and Consumer Sentiment
The primary vulnerability for sports franchises lies in game-day revenues, including ticket sales, concessions, and merchandise. With economic growth slowing and consumer confidence waning, discretionary spending is tightening.
Nevertheless, sports remain a vital cultural distraction. Marc Ganis, president of consulting firm Sportscorp, highlights that during tough times, Americans continue to turn to sports for relief and entertainment.
| Asset Class | 20-Year Returns |
|---|---|
| Sports Teams | 12.3% |
| Private Equity | 14.2% |
| U.S. Equities | 10.4% |
| Private Credit | 9.3% |
| Real Assets | 8.5% |
| Global Equities | 8.2% |
| U.S. Small Caps | 7.8% |
| Commodities | 2.9% |
Werner echoes this sentiment:
“Obviously you need to have eggs on the table, but people are still going to go to their home games and watch on television.”
The Red Sox’s loyal fan base exemplifies this resilience, having sold out every home game from 2003 to 2013, even through the financial crisis. More recently, the team attracted 35,000 fans to an 11 a.m. game—a testament to its deep-rooted connection with New England.
Frequently Asked Questions
How do Trump’s tariffs affect the overall economy?
Trump’s tariffs have introduced uncertainty and increased costs for many industries, contributing to market volatility and raising fears of a potential recession.
Why are sports team owners less affected by these economic shifts?
Sports franchises benefit from long-term media rights contracts, sponsorship deals, and premium seating revenues, which provide stable income streams less sensitive to short-term market changes.
Have sports team values declined during past economic crises?
Historically, sports team valuations have remained stable or increased even during recessions, such as the 2008 financial crisis and the Covid-19 pandemic.
Can economic downturns impact game-day revenues for sports teams?
Yes, ticket sales, concessions, and merchandise revenues can fluctuate when consumer spending tightens, but overall franchise values often continue to grow.
What factors contribute to the long-term growth of sports franchises?
Scarcity of teams, strong fan loyalty, lucrative media rights deals, and global brand recognition all drive sustained increases in franchise valuations.
Conclusion
While Trump’s tariffs and looming recession fears weigh on the broader economy, sports franchise owners benefit from unique structural advantages. Long-term contracts, limited supply, and unwavering fan loyalty combine to create an asset class that historically grows stronger, even in challenging times.
As the market jitters continue, sports teams remain a reliable refuge for investors, poised to thrive well beyond the current economic headwinds.