Washington Redskins vs. Carolina Panthers
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The Washington Redskins are the most valuable NFL team in 2004.
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updated 9/3/2004 2:39:23 PM ET 2004-09-03T18:39:23

The National Football League is the most valuable and profitable team sport in the world. This year the average team is worth $733 million, a 17 percent increase over last year. Operating income (earnings before interest, taxes, depreciation and amortization) for the 32 teams came in at $851 million on revenue of $5.3 billion, an operating margin of 16 percent.

Baseball teams come the closest in valuations to football, with an average value of $295 million. When we last looked at the National Basketball Association, the second most profitable sport, the league's operating margin was only 6.5 percent.

The league's national television contract ($17.6 billion over eight years) is responsible for the NFL's rich team valuations, and a cap on player salaries of no more than 65 percent of specified revenue explains the fat margin. But the pecking order of team values and profits is determined by stadium economics.

The eight most valuable teams control or own their stadiums and are therefore able to rake in millions of dollars in corporate sponsorships and advertising from the likes of American Express, FedEx, Gillette and PepsiCo. The nine teams with the lowest valuations play in antiquated stadiums that are controlled by municipalities.

In 1993 the price of an expansion team in the NFL was $200 million ($222 million in 1999 dollars). In 1999, the last time the league expanded, the Houston Texans went for $700 million. Don't look for football franchise values to stop climbing any time soon. Taxpayers in most cities pony up to finance new stadiums for billionaire owners. Also, the league is one of the few monopolies permitted in the U.S. and its weak union allows for owners, not the marketplace, to set their salaries. Great business, football.

© 2012 Forbes.com

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