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Medium Profitability Investment Decision Market Entry Investment Analysis

NFL in Mexico

#Entertainment #Sports #Investment
ProHub Comment

This case tests candidate ability to build a comprehensive NPV model for a sports franchise investment. Success requires accurate identification of both revenue drivers (ticket sales, TV contracts, advertising, merchandise, concessions) and cost drivers (player salaries, operations), combined with strategic thinking about market expansion into an international market with unproven demand for American football. The negative NPV conclusion can be challenged through creative brainstorming on underutilized stadium assets.

Estimated Time 15 minutes
Difficulty Medium
Source Darden
50 / 100
Your client is a wealthy former founder and CEO of a multi-national company interested in a new investment opportunity. The National Football League (NFL) wants to expand into Mexico by establishing an expansion franchise in Mexico City. This will be the NFL’s first internationally based franchise, although the NFL has recently featured some games between American-based teams in Mexico City and London. The NFL is seeking owners for the team. Our client has sought our advice on whether they should pursue ownership.

Clarifying Information

  1. Does the client have a financial target in mind? The client wants a positive NPV on owning and operating the team.
  2. How do NFL franchise owners make money? Teams make money through a league-wide share of TV-contract revenues and a mix of team-specific revenue streams such as advertising, tickets, etc.
  3. What kind of company did the wealthy client found? The telecoms industry. The company has a reputation as a highly innovative company, including recent technology boosting mobile internet connections in high-density places. Although our client is no longer involved with day-to-day operations, as founder he retains a strong relationship with the company.
  4. Does our client have any experience with sports franchises? No, this would be their first foray into the sports industry