Are Packers worth $1.25 billion?

packers-logo-3d-grassAt $250 per share, management of the Green Bay Packers has established a value of the non-profit franchise at a stratospheric $1.25 billion.

If all 250,000 shares sell in the current offering, and it looks like they will, there will be about five million shares outstanding. The multiplier of $250 puts the valuation at that billion-plus level.

That’s a far cry from the value back in 1923 when Lee Joannes lent the team $6000 after it went bust after its first four years. He took back a note, and then led the first of five stock raises. Joannes, Andy Turnbull and their friends raised enough to pay off the note. And they then and there laid the foundation for the non-profit corporation.

In trouble again during the Great Depression, the franchise went into receivership, meaning a value of near zero. The same group, called “The Hungry Five” for their fund raising determination, sold shares for $5 and reinforced the community-owned, non-profit stock status. The franchise came out receivership in 1937.

That same zero value could be ascribed to the team when it again went insolvent in 1950.  Green Bay business leaders, led again by Joannes, tin-cupped around town to raise $125,000 to keep the team in Wisconsin. The share price was $25.

This piece of history comes from my dad’s book, “The Packer Legend – an Inside Look,” published in 1982. John Sr. started covering the Packers as a newsman while in college in 1932. He was elected to the Packer board in 1949, peddled stock to friends and later served on the executive committee, going emeritus in 1983.

Dad estimated the value of the team in 1982 at $25 million.

So, the escalation in value over the last 30 years is astounding.

“Value” is a funny money term to apply to the Packers, because it will never be sold. If something is not for sale, it could be viewed either as valueless or of infinite value. It is mainly of sentimental value.

As a Green Bay native and shareholder, I say the franchise is invaluable — it cannot be valued. Buying a share could be called a paradox: a charitable investment. It is neither a real share nor a charitable donation, which would merit a tax deduction. But, shareholders can vote for the election of directors, one tangible form of power or control.

The stock is valueless in monetary terms because it pays no dividends, and, in the remote chance that the board and shareholders would vote to sell or dissolve at some distant date, no cash would go to shareholders. All the capital gains would go to the Packers charitable foundation.

In that light, it makes sense that the Packers have stepped up their charitable giving through their foundation. With consistent contributions over the years, the foundation could some day be huge. Think of the enhancement that would bring to an already hallowed brand.

The first and foremost concern of the board of the Packers, now profitable, has to be a financial reserve that permanently secures the franchise. Charity comes second. The non-profit organization has to compete with for-profit billionaires, the owners of competing franchises, who are not all the most benevolent people in the world.

Other protections are for the small-town team are prominence of the Packers brand, the over-whelming support of the fans across Wisconsin and the other 49 states, the perpetual waiting list for tickets, the proposed expansion of the stadium to fourth largest in the NFL and the growing reserve fund.

The League needs the Packers and its unique story. As my dad chronicled, George Halas knew that. Papa Bear was a stalwart supporter as the small team from up north got established.

The eternal credit for having the foresight to create a community-owned team, the world’s only non-profit corporation owned by stockholders goes to “The Hungry Five.”

It’s not like there’s never been a challenge to the community ownership. The Packers first star player and coach, Curly Lambeau, made a run to take over the team in 1949. With some anonymous backers, he offered to take the team private by buying all the shares the 1950 stock offer.

After lots of maneuvering, the board voted in a split vote to preserve the non-profit status. At $25 per share, they raised $125,000 and thereby preserved the community foundation for the storied ownership that now owns 13 championships.

Another raise in 1997 at $200 per share included a stock split of 1000 shares for each older share. It raised $24 million. It put the 1950 purchase price at the equivalent of 2.5 cents per share.

In a perhaps unintended way, the new “valuation” of $1.25 billion is high enough to limit the range of buyers who might top that with a tempting bid.

There are some franchises that have real market valuations of more than $1 billion, but not many.

The Packers valuation is about five times its revenues and 125 times its earnings of about $1 per share. Those atmospheric multiples eliminate almost all potential buyers – if there were ever to be a sale – which isn’t going to happen.

So, after all that business talk, here’s my question; how much will the franchise be worth after the Pack goes 19-0 to win the Super Bowl XLVI?

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