The WFT’s relative value increases for the first time in the Snyder era

This week, Forbes published its annual list of NFL team valuations and, to the surprise of very few, the increase in value of the league’s 32 organizations was uniform and dramatic, coming on the heels of a record-breaking TV deal signed earlier in the year. Every team in the league increased in value by at least 11% year over year. In Washington’s case, the team value jumped $700,000,000 from 2020 to 2021, a 20% increase year over year.

That increase isn’t the real shocker, however, given the lucrative TV contract. What’s something of a surprise is that the Washington Football Team’s relative team value, which had cratered from #1 in the league when Dan Snyder initially bought the team to 8th in the league in 2020, actually improved to #5 in 2021.

For the first time in the 20 years of Dan Snyder’s ownership, the team actually improved its financial position relative to the other teams in the league. Why?

From Forbes:

Although they lost in the Wild Card round to the eventual Super Bowl Champion Buccaneers, Washington had a successful 2020 season on the field. Ron Rivera took over as head coach for Jay Gruden and led the team to a 7-9 record, good enough to win the NFC East, all while battling cancer. The team also progressed in its name search, reportedly set to reveal the new nickname and logo in early 2022. Dan Snyder solved the minority ownership issue by purchasing the shares himself, for roughly $900 million.

Forbes tracks several different metrics over time for each of the teams, so that seems like a ripe spot to see if there’s something in that data that might provide us a clue as to the root cause of the improvement.

Last year’s revenue was $388M, down dramatically from $504M the previous year, primarily as a result of COVID-19 associated impacts. The revenue number was actually the lowest since 2013, and a much steeper decline than a team like the Cowboys, whose operating income was a staggering 11 times higher than Washington last year.

Photo by Jayne Kamin-Oncea/Getty Images

Washington’s operating income was decimated in 2020, coming in at $25M, less than 20% of what it had been in 2019 ($135M), again, primarily because of COVID-19. That was the lowest amount of operating income in more than a decade. Again, as a point of comparison, the Cowboys’ operating income slipped by about a third in 2020, but even with that slip, it was still at about 2015 levels.

Meanwhile, player expenses in 2020 ($230M) were the highest they’d ever been. This pattern held true for a team like the Cowboys as well.

Washington has a debt to value ratio of 17%, which puts in at 5th worst in the league, behind the Chargers, Rams, Raiders, and Falcons, all teams who have recently invested heavily in mega-stadiums. Meanwhile, FedEx Field is one of the oldest stadiums in the league and quickly approaching the timeframe for replacement. Once that occurs, assuming a minimal (or non-existent) public subsidy, expect the WFT’s debt to value ratio to climb even higher.

So, if the internal revenue/debt dynamics don’t appear to be responsible for the team’s improvement in valuation relative to its peers, what could it be? The team with no name certainly doesn’t appear to poised to pocket piles of money from lucrative branding rights, at least not yet.

I’d argue to team’s relative improvement is the result of two critical management decisions: 1) The decision to extricate Dan Snyder from the regular operations of the team, and; 2) The decision to replace his management with Ron Rivera and Jason Wright.

Snyder’s business missteps, particularly as they pertain to the WFT, are legendary, and I don’t think there’s any way to accurately describe his management tenure of the team over the course of the past 20 years that doesn’t rely on a liberal use of the word “incompetence.”

Thankfully, it appears that Snyder may have finally recognized his own shortcomings and turned over operations of the organization to a highly effective, and respected, management team of people qualified to guide a multi-billion dollar football operation. This most recent Forbes report seems to indicate that the market approves as well.