Investing in Professional Sports Leagues
Investing in Professional Sports Leagues
A piece of the action: investing in professional sports leagues and related businesses
I’ve never written on sports team ownership before. The simple reason: historically it has been confined to a
small cohort of extremely wealthy individuals. The chart shows the estimated net worth of current control
owners in basketball, football, baseball and hockey. The majority are individuals whose net worth ranges from
$1 to $10 billion, and we had to use a log scale to capture the ones higher than that. In other words, sports
team ownership has typically not been accessible to the average individual or diversified institutional investor.
Net worth of major league sports team control owners
US$, billions, log scale
$100.
NBA
NFL
MLB
$10. NHL
$1.
$0.1
Source: JPMAM, May 2024
Ownership rules have been changing. Most major US sports leagues now allow a select group of private equity
funds to own minority stakes in individual teams, and for the same funds to own multiple stakes in multiple
teams. The table shows the latest rules as we understand them. The ownership of minority stakes has become
more popular in recent years; 45% of global sports deals in 2023 were minority investments, and ~60% of sports
deals in the big four US sports were minority investments1. With the latest rule changes, select funds and their
LPs can increasingly invest in franchise minority stakes alongside individuals.
North American leagues' private equity rules
Maximum private equity Maximum private Sovereign
Year first # of teams a
ownership of a single equity ownership of a Wealth Funds
allowed fund can own
team across firms team by a single fund permitted?
NBA 2021 30% 20% 5 ✓
MLB 2019 30% 15% Unlimited
NHL 2021 30% 20% 5 ✓
MLS 2020 30% 20% 4
NFL Pending Pending Pending Pending
Source: Bloomberg, Sportico, 2024
Sports investing extends well beyond ownership of professional sport franchises and includes companies
focused on real estate, media, operations, collectibles, personal fitness, player management, sports betting
and more. This Eye on the Market special issue looks at valuations, team operating margins, drivers of league
parity (revenue-sharing, salary caps), broadcast and streaming revenues, attendance and ticket prices,
comparisons to European soccer, emerging sports leagues, the controversy around stadium subsidies, sports
betting and other adjacent businesses, the esports winter, the worst teams money can buy and a trichotomy
chart showing the best basketball players of all time.
Michael Cembalest
JP Morgan Asset Management
1
“Deloitte’s 2024 Sports Investment Outlook”, Deloitte, March 2024. Currently, there are 24 minority owners
in the MLB, 138 in the NBA and 90 in the NFL
1
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Table of Contents
What are private equity funds planning on investing in and lending to? .............................................................. 3
Valuations, transactions, debt levels and operating margins for the four major US sports leagues ....................... 4
The streaming wars and the decline of regional sports networks ......................................................................... 7
In-person attendance trends and ticket price inflation ...................................................................................... 10
League parity benefits owners in US sports leagues, but not in Europe .............................................................. 11
Primary drivers of professional sports parity: revenue-sharing, the draft and salary caps ................................... 13
European soccer: relegation, rising player salaries, rotten returns to public investors and new regulations ........ 16
International and emerging sports: an update the MLS, F1 and start-up efforts in various sports ....................... 18
Stadiums and subsidies: a controversial source of value for sports team owners ............................................... 20
Adjacent businesses: examples in apparel, image management and player management .................................. 22
Sports betting: Supreme Court rulings, parlays and fantasy sports regulatory arbitrage ..................................... 23
The esports winter continues: poor business fundamentals, layoffs and league terminations ............................ 26
Appendix I: US sports leagues mostly function as unregulated monopolies under the Sherman Act ................... 27
Appendix II: The Worst Team that Money Can Buy ........................................................................................... 28
Appendix III: The best basketball players of all time .......................................................................................... 29
Appendix IV: Valuations, revenues, debt and operating income by team ........................................................... 31
Appendix V: The Ronaldo effect of departing players ........................................................................................ 35
2
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
What are private equity funds planning on investing in and lending to?
The decision by US sports leagues to allow private equity ownership has prompted the creation of investment
funds that include franchises along with sports-adjacent companies. The table outlines investment categories
that some funds are contemplating. A few points:
• Investment firms are generally prohibited from buying minority stakes if any fund they control invests in
sports gambling, player management or other businesses that represent players in some capacity
• If a control owner in a given league is also a private equity principal, that PE firm would be unable to invest
in that league since the PE principal/sports owner would have access to confidential information
• There are a few sports teams that are publicly traded: Atlanta Braves, Manchester United and the New York
Knicks/Rangers. Although the public can buy a stake in these franchises, voting power rests with control
owners whose Class B shares entail 10 times the voting power of public Class A shares2
• Some sports businesses are subsidiaries and not accessible as pure play investments: ESPN (Disney), TNT
Sports (WB Discovery), CBS Sports (Paramount), FOX Sports (Fox Corporation) and NBC Sports (Comcast)
• As a result, the ability to construct a diversified portfolio of professional sports and related investments
might be greater in private markets than in public markets. Whether a traditional private equity holding
period of 5-7 years is ideal for sports investing remains to be seen
Teams Collectibles
Majority ownership in sport franchises** Trading cards, memorabilia, NFTs
Minority ownership in sports franchises Apparel
Players/Talent Real Estate
*
Player performance related services Sports team and stadium financing
Sports analytics software Arenas/tracks/golf courses
Sports agencies Arena adjacent property developments
Underwriting player contracts Sports adjacent fitness franchises
Media Operations
Media rights and streaming Venue mgmt (tickets, sponsors, concessions, etc.)
Social media/fan engagement Equipment for arena, event operations and athletes
Media outlets that cater to sports fans Third party ticketing apps
Leagues Betting
Emerging sport leagues Fantasy sports
Youth sport academies Betting apps/sites
Summer camps Live sports books
Video games
E-sports (streaming, competitions)
Sports video games
*Includes player training, coaching and development; physical rehabilitation, biomechanics, nutrition, mental strategy, etc.
**While majority ow nership by private equity funds is not currently permitted in the 4 largest US sport leagues, some emerging and international
leagues permit it
2
John Malone controls ~50% voting power over the Atlanta Braves; the Glazer family controls 69% voting power
over Manchester United; and the Dolan family controls 71% voting power over the Knicks and Rangers (MSGS)
3
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Valuations, transactions, debt levels and operating margins for the four major US sports leagues
Owners of professional sports franchises have three different diversified sources of revenue: (a) shares of league
distributions from revenue-sharing, (b) a protected marketing area in which to build a consumer brand and a
premium live entertainment business, and (c) ancillary businesses related to the stadium, media and other
operating assets. All US sports leagues essentially function as very lightly regulated monopolies under the
Sherman Act (see Appendix I for more details), which is a substantial contributor to value creation as well.
The most frequently cited valuations for sports franchises come from Forbes and Sportico. The chart shows
franchise sales since 2014; note how remarkably close actual sales prices (bars) were in most cases compared
to Forbes’ estimated pre-sale appraisals (dots).
NBA, NFL, NHL, and MLB sale values since 2014
US$, billions
$7
NFL
$6
NBA
$5 MLB
NHL
$4 Pre-sale Forbes value
$3
2014
$2
2021 2023 2024
$1 2014 2014 2014 2018 2019
2014 2018 2022 2023 2015 2017 2017 2018 2019 2020 2021 2023 2023 2023 2023 2016 2017 2019 2020 2024
$0
Broncos
Coyotes
Coyotes
Coyotes
Panthers
Hawks
Rockets
Suns
Marlins
Orioles
Penguins
Senators
Bills
Nets
Nets
Jazz
Mavericks
Mariners
Commanders
Bucks
Grizzlies
Timberwolves
Bucks
Mets
Clippers
Hornets
Islanders
Hurricanes
Royals
Source: JP Morgan Sports Coverage Team, 2024
Forbes also constructs a valuation index for each league. As shown below on the left, these indexes have
substantially eclipsed the S&P 500 since 2005. To be clear, sports teams are much more expensive than equities:
most teams are now valued at 5x-12x sales compared to ~3x sales for the S&P 500.
In the NFL and NHL, the valuation gap between the least and most valuable teams is ~2.5x compared to 3.2x in
the NBA and 7.6x in the MLB. Less revenue-sharing, the lack of salary caps and higher exposure to local media
rights are part of the reason why the MLB range is much wider; we review these topics later in this paper.
Sport team valuations vs equity markets Valuation to revenues for major sports teams vs S&P 500
Index (100 = 2005) price to sales
1,400 16x
NBA
14x NBA NFL NHL MLB S&P 500
1,200
12x
1,000
NHL 10x
800 MLB 8x
600 NFL 6x
S&P 500 4x
400
2x
200
0x
0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Teams sorted in descending order of valuation to revenues
Source: JP Morgan Sports Coverage Team, Forbes, Bloomberg, 2024 Source: Forbes, Bloomberg, JPMAM, 2024
4
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
40%
MLB LA Rams, 46%: NFL owners approved a debt waiver
to allow construction of SoFi stadium, allowing the
30% NBA
team to exceed the debt cap
20% Miami Marlins, 45%: a reflection of very high levels
10%
of debt used by purchasers in 2017
Arizona Coyotes, 62%: a struggling franchise with
0%
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 the lowest valuation in the NHL which was recently
Teams sorted in descending order of debt to valuation sold and will be relocated to Utah next season
Source: Forbes, Bloomberg, JPMAM, 2024
• Cross ownership is more common. Examples include Kroenke Sports & Entertainment (LA Rams, Denver
Nuggets, Colorado Avalanche, Colorado Rapids; Arsenal); Harris Blitzer Sports (Philadelphia 76ers, NJ Devils,
Washington Commanders, Crystal Palace); Monumental (Washington Capitals, Washington Wizards);
Fenway Sports Group (Boston Red Sox, Liverpool, Pittsburgh Penguins). Also: eleven MLS owners have cross
holdings in other leagues
• Development. For many decades, teams played in stadiums that were constrained by local surroundings or
that were built in industrial locations far from residential and retail hubs. Beginning with redevelopment of
Camden Yards in Baltimore, owners began redeveloping land surrounding stadiums. Additional examples
include The Battery at Truist Park in Atlanta, the urban renewal of the Wrigley Field area, the revitalization
of DC near the Capital One Arena and the creation of a new urban district at SoFi Stadium
• Tax benefits. Active control owners can depreciate sports team investments against related income, and/or
against unrelated active income. Depreciable assets include player contracts, season ticket lists, stadium
lease agreements, TV/radio contracts, concession contracts, luxury suites, etc. LPs actively involved in team
management may have the same depreciation rights as active control owners. Subject to certain rules and
limitations, passive LPs can typically offset investment income with related depreciation within a
partnership and potentially use any excess losses to offset other passive unearned income. LPs should
consult their own tax counsel to confirm tax treatment of any investment
• Portfolios. Some studies assert improved risk-adjusted returns by adding sports ownership to portfolios.
However, most are highly reliant on infrequent appraisals or repeat sales methodology, both of which do a
poor job of capturing risk in a mean-variance framework. Sports team ownership and private assets
generally should be evaluated based on excess returns vs public equity markets using time-weighted return
comparisons, as per our biannual Alternative Investments Review published last December
5
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Operating margins
NFL, NHL and NBA teams benefit from rising broadcast revenues, league-imposed fiscal discipline, socialization
of revenues and salary cap provisions. Operating margins in these leagues have generally improved over the
last 20 years as salaries declined as a share of revenues (see chart, lower right). The lack of salary caps and fiscal
discipline is more evident in the MLB where operating margins are generally lower, and in some cases negative.
The median NHL operating margin has tripled since 2018-2019 after the NHL signed seven-year deals with both
Disney and Turner Sports in 2021, averaging a total of $635 mm per year. Another interesting development in
the NHL: teams from low tax states have an advantage recruiting players vs high tax states and Canadian
provinces, particularly given just a cumulative 2.4% increase in the NHL salary cap since 2020. Since that year,
11 of 20 teams that made it to the conference finals came from Texas, Florida or Nevada (i.e., no state tax)3.
To be clear, operating income excludes interest on debt, taxes, capital projects and other costs. As a result,
operating income is not a proxy for whether a team has positive cash flow or not. For valuations, revenues,
debt, operating income and related ratios by team and league, see Appendix IV.
Operating income margin by team and league
Operating margin
50%
40%
30%
20%
10%
Nets
0%
Clippers
Athletics
-10% Rockies
White Sox Bucks
-20% Blue Jays
-30%
NFL Padres
-40%
NHL
-50% NBA
-60% MLB
-70%
Mets
-80%
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31
Teams ranked by operating margin
Source: Forbes, JPMAM, 2024
Over the next few pages we analyze major components of league revenue which drive these operating margins.
We start with national broadcast and streaming revenue given its importance; then we discuss the timely issue
of local media rights given the bankruptcy of Diamond Sports and its impact on the MLB (and NBA/NHL as well).
We follow up with a look at in-person attendance trends and ticket prices.
League revenue by type Player expenses as a percentage of revenue
Percent of total revenue Percent
100% 65%
Other Other Other Other MLB
90%
Local media NFL
80% Local media 60%
Seating/ Team Local media NBA
70% suites sponsorship Team NHL
sponsorship
60% 55%
Seating/
50% suites
Seating/ Seating/ 50%
40% suites suites
National
30% revenue
National 45%
20%
revenue National
10% National
revenue
revenue 40%
0%
2006 2008 2010 2012 2014 2016 2018 2020
NFL NBA MLB NHL
Source: Sportico, February 2024 Source: Forbes, JPMAM, 2024
3Professional athletes owe taxes in every jurisdiction where they work, but the bulk of their salary is taxed
at the rate of their home state. Assume a $3mm NHL contract: state taxes in Texas $0, California $371k.
6
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
$6
CBS / FOX / NBC
NFL 2023 2033 1.8x $5
/ ESPN
$4
NHL ABC / ESPN / TNT 2021 2028 2.1x
$3
Estimated number of adult scripted original series US sports media rights payments
600 US$, billions
$35
500
$30
400
$25
300
$20
200
$15
100
$10
0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
2002 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: FX Research, 2023 Source: S&P Global, March 2023
4
“Sports M&A: Coming for your team”, Deutsche Bank, April 8, 2024
7
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
5
“Do NFL Sign-ups Stick Around?”, Antenna, March 21, 2024
6
Thursday night NFL games. Pro: “Thursday Night Football: Better Than You Think”, Harvard Sports Collective,
May 2021; Con: “The Existential Horror of Thursday Night Football”, NYT, October 19 2022
7
“Apple Reportedly Making Push For Global Formula 1 Rights”, Front Office Sports, April 15, 2024
8
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
9
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Stable attendance does not imply that stadium-related revenues are flat. On the contrary: according to Forbes,
gate receipts for the big four sports leagues have risen much faster than core inflation, and faster than the
“admission to sporting events” category in the CPI report. The reason: Forbes includes the value of suites and
luxury boxes. The chart on the right shows the lowest and highest cost NFL stadiums for a beer and a hot dog.
Ticket inflation outpacing core CPI The most expensive and cheapest NFL stadiums for a beer
Index (100 = December 2007) and hot dog, US$
190 $20
Big 4 gate
180 receipts / $18 Beer Hot Dog
Raymond James Stadium (TB)
$14
140 $10
Ford Field (DET)
$8
130
$6
120 US CPI Admission
$4
110 to Sporting Events
US Core CPI $2
100
$0
2007 2010 2012 2014 2016 2018 2020 2022 2024
Source: Bloomberg, Forbes, JPMAM, April 2024 Source: WhiskeyRiff, September 2023
8
“NFL grows viewership, attendance in strong year”, SBJ, Jan 15, 2024; NBA and NHL press releases, April 2024
10
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
60
NBA
MLB
50 NHL
NFL
40 This analysis was adapted from an original article by
↓ More parity the Harvard Sports Analysis Collective in 2016 which
30
2009 2011 2013 2015 2017 2019 2021 2023 we updated to 2023
Source: Sports Odds History, JPMAM, 2024
9
In this piece we refer to “European soccer” rather than “European football” to avoid confusion when
discussing American football. Don’t ping me about US-centrism: “soccer” is a thoroughly British word. In the
early 1800s in England, football and rugby existed as different variations of the same game. In 1863, the
Football Association was formed to codify rules so that schools could play against one another. The shortened
terms “rugger” and “soccer” were coined to differentiate between Rugby Football and Association Football.
10
In European soccer, deep-pocketed Middle Eastern sovereign wealth funds now own franchises like Paris St-
Germain, Manchester City and Newcastle United. And in a strange turn of events, the private capital firm
Oaktree Capital Management took control of Inter Milan this month after its Chinese owners defaulted on a
€400 mm loan. This occurred after Inter Milan won the Serie A title, which makes it all even stranger.
11
“The Effect of Outcome Uncertainty on Spectator Attendance in the Australian Football League”, Ferguson and
Lakhani, April 10, 2023
11
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
0.8
EPL
0.6
NBA
0.4 MLB
NFL
NHL
More evidence of low parity in European soccer:
0.2
Bayern Munich was the Bundesliga champion for the
↓ More parity last five years, and PSG was the Ligue 1 (France)
0.0
1980 1990 2000 2010 2020 2030 champion for six of the past seven years
Source: JPMAM, 2024
Another important parity statistic: market size is not a determinant of team success
Using census data for each team’s associated city, we looked at the relationship between winning percentage
and city population for all four major US leagues from 1980 to 2023. In the NFL, NBA and NHL, the average
correlations between city size and team winning percentage were actually slightly negative over this period. In
other words, market size does not automatically translate into success, and plenty of small market teams did
well [any Knicks, Nets, Mets and Jets fan knows this]. The correlations were modestly positive for the MLB,
which is consistent with the lack of an MLB salary cap. These findings confirm the importance and impact of
revenue sharing provisions and other parity drivers in US major league sports.
Extreme parity: the most unexpected championship upsets based on preseason odds
• In 2001, the preseason odds for the New England Patriots to win the Super Bowl were 60-1. The Patriots beat the
Rams that year whose preseason odds were 4-1
• In 2007, the New York Giants (30-1) beat the New England Patriots (2.5-1) in the Super Bowl
• In 2002, the Anaheim Angels (40-1) beat the San Francisco Giants (12-1) in the World Series
• In 1991, the Minnesota Twins (80-1) beat the Atlanta Braves (200-1); in other words, both American and National
League winners defied the odds of getting there
• In 1999, the St. Louis Rams (150-1) defeated the Tennessee Titans (30-1) in the Super Bowl
• In 1997, the Florida Marlins (100-1) defeated the Cleveland Indians (50-1) in the World Series; and in 2003, the Florida
Marlins (75-1) defeated the NY Yankees (2-1)
• In 2015, Leicester City overcame 5,000-1 odds to win the English Premier League over Tottenham (105-1)
Other upset examples: Buster Douglas over Mike Tyson; US Olympic Hockey 1980 gold medal; NC State wins NCAA
Tournament in 1983; Detroit Pistons over LA Lakers in 2004; NY Jets win Super Bowl III; Francesca Schiavone wins US
Open in 2010 (100-1 odds); Upset beats Man o’ War in 1919 (only horse ever to do so); Uruguay over Brazil in 1950
World Cup that was held in Rio
12
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Primary drivers of professional sports parity: revenue-sharing, the draft and salary caps
A primary driver of sports parity is revenue-sharing. A look at revenue by team at time of sale across years and
leagues indicates as much (the NFL jump is mostly related to the increase in media rights).
NBA, NFL, NHL, and MLB team revenue at time of sale
US$, millions
$600
NFL NBA MLB NHL
$500
$400
$300
$200
$100
2014 2018 2022 2023 2014 2014 2015 2017 2017 2018 2019 2020 2021 2023 2023 2023 2023 2016 2017 2019 2020 2024 2014 2014 2018 2019 2021 2023 2024
$0
Mariners
Panthers
Rockets
Suns
Marlins
Bills
Hawks
Nets
Nets
Jazz
Mavericks
Orioles
Penguins
Senators
Commanders
Bucks
Grizzlies
Timberwolves
Bucks
Mets
Clippers
Hornets
Broncos
Royals
Islanders
Coyotes
Hurricanes
Coyotes
Coyotes
Source: JP Morgan Sports Coverage Team, 2024
12
“How Sports Teams, Leagues and Owners Make Money”, Sportico, February 2024
13
“NBA Salary Cap FAQ”, Larry Coon, Sports Business Classroom, November 2022
14
“Revenue sharing”, Baseball Reference, 2020
15
“National Hockey League Franchise Valuations”, Sportico, October 2021
13
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
16
“To draft or not to draft?”, Johnston et al, Scandinavian Journal of Medicine, Science and Sports, 2021
14
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
1.5 SanD
TOR LAA
PHI
LAD
1.0
CIN TAM
0.5
KC CLE
PIT
BAL
OAK
0.0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31
Teams ranked by payroll vs the median league payroll
Source: JPMAM, 2024
Payroll parity in major sports leagues
Team 2023 payroll divided by median league 2023 payroll
9
Madrid
8
7 FC Barcelona
La Liga
6 EPL
MLB
5 Atletico
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Teams ranked by payroll vs the median league payroll
Source: JPMAM, 2024
15
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
European soccer: relegation, rising player salaries, rotten returns to public investors and new regulations
There are five major European soccer leagues; in prior sections on parity and salary caps, we focused on the two
largest in terms of revenue, the English Premier League and La Liga (Spain) since we had all the data needed.
However, we are not able to compute valuation-to-revenue ratios within each soccer league since Forbes only
covers the largest 21 teams across the five European leagues rather than covering all 96 teams. As a result,
Forbes data is not a full sample for each league and does not allow inferences to be drawn regarding valuation
disparities within a league and the benefits of any revenue-sharing.
On the English Premier League. Relegation refers to a team finishing towards the bottom of the EPL, in which
case it competes in the lower tier EFL Championship League the next year. As shown in the table, finishing
towards the bottom in the EPL results in substantially lower revenues in that year, and as much as a 60% decline
for relegated teams in the next year. When teams are relegated, part of the financial hit can be mitigated by
“parachute payments” but only to teams that have been relegated within the last three years.
Team revenue in the EPL and EFL Championship, 2019-20 season "Big Five" European league club revenues, 2021-2022
Finishing Matchday Broadcast Commercial Total Cumulative revenues (GBP, billions)
GBP, millions
position revenue revenue revenue revenue £7
UEFA Champions Matchday
#1 - #4 £66 £178 £200 £444 £6
league Commercial
UEFA Europa
#5 - #8 £61 £118 £148 £327 £5 Broadcasting
League
Teams relegated £3
#18 - #20 £8 £89 £15 £112
from the EPL
EFL Championship £2
teams with £5 £39 £8 £52
parachute payments £1
EFL Championship
teams w/o parachute £5 £8 £7 £20 £0
payments EPL La Liga Bundesliga Serie A Ligue 1
Source: Secretariat International Consulting, October 2023 Source: Secretariat International Consulting, October 2023
A relegation story: the Luton Town Hatters and the impact of relegation/promotion
Luton Town was relegated from the EPL in 1992 and fell as low as the third tier by the early 2000s. They
rejoined the EFL Championship League for a single season in 2005 but were relegated again from the EFL
to the lesser tier League One and League Two over the next three seasons. In 2010 the team improved,
finally reaching the top tier EPL again in 2023. Luton Town’s EFL revenue was £17.6 mm in 2021 and rose
to £200+ mm in 2023
17
“Valuations of sports teams on the rise”, Secretariat International Consulting, October 2023
16
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
For these and other reasons, investment returns in European soccer have been poor compared to a European
stock market index (Euro Stoxx 600). The chart at the right explains why: the average European soccer team
simply does not make any money. A major challenge facing European soccer clubs: less leverage over players
since there are so many leagues for good players to compete in; the same is not true for major US sports leagues
which pay much more than overseas counterparts. A University of Portsmouth study analyzed the financial
accounts of English Premier League clubs from 1993 - 2018 to assess how exposed they were to economic shocks
such as the global financial crisis, finding that only Arsenal was resilient enough to withstand a shock18. Another
challenge for European soccer clubs: the Ronaldo effect (the impact of major players departing), which greatly
impacted Juventus’ share price when he joined and again when he left. See Appendix V for details.
Total return performance of select European soccer clubs vs European top 10 division: net revenue, avg per club
Stoxx 600, Index (100 = January 1, 2019) EUR, millions
200 300
ManU Borussia Dortmund
180 S. S. Lazio Juventus Revenue
AFC Ajax Stoxx 600 250
160
200 Net Revenue
140
150
120
100 100
80 50
60 0
40 GER RUS TUR NETH PORT
-50 ESP FRA
ENG ITA
20
2019 2020 2021 2022 2023 2024 -100
Source: Bloomberg, JPMAM, May 27, 2024 Source: "Sports M&A: Coming for your team", Deutsche Bank, April 8, 2024
A comprehensive discussion of European soccer would be incomplete without referencing the following19:
• Tax investigations into UK football clubs recovered £125 mm in unpaid taxes for the fiscal year ending March
2023, double the amount from the prior year; part of the UK focus is on compensation disguised as image
rights payments with the goal of avoiding National Insurance taxes
• In Italy, Serie A clubs were determined by the Italian Revenue Agency to have underpaid taxes by €500 mm
• Suspension by UK tax authorities and criminal offenses like tax evasion are now grounds for automatic
disqualification for owning or running an English Premier League team
• Spanish tax authorities fined clubs like Barcelona for incorrectly paying taxes on player agent fees; also,
Barcelona is under investigation for active bribery of a refereeing committee
• In 2019, the EU added football to its money laundering watchlist; this year, the European Parliament voted
to include football in its sixth anti-money laundering directive. Starting in 2029, teams will have to verify
customer identities, publish beneficial owners, monitor transactions including player transfers and report
suspicious transactions. This directive covers the Bundesliga, Ligue 1 and Serie A
• There are currently disputes between the EPL and member team owners regarding sponsorship rights and
team payrolls since the higher the sponsorship payments, the higher a team’s payroll can be. One example:
the UAE owns Man City and has been cited by the EPL as inflating sponsorship payments from UAE entities
(Etihad Airlines, Emirates Palace, Aldar Properties, Masdar etc) as a back-door way of increasing Man City’s
salary cap. When the Saudi’s bought Newcastle, procedures were put in place to prevent this by requiring
sponsorship valuation at fair market levels. This dispute is one of several issues being investigated by the
EPL regarding Man City compliance with financial regulations
18
“Measuring the resilience of EPL clubs”, Cox and Philippou, Soccer and Society, April 2022
19
“Tax investigations into UK football”, Hacker Young Chartered Accountants, Oct 2023; “New bill targeting
football fraud”, Guardian, April 2024; “Money laundering in football”, Royal United Services Institute, Jan 2024
17
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
International and emerging sports: an update the MLS, F1 and start-up efforts in various sports
The MLS and F1 are essentially transplants of non-US sports to the US. Both are seeing meaningful expansion:
• Major League Soccer (MLS) has grown the number of teams to 29 vs 10 in 1996 and plans to debut a 30th
team in 2025. Sponsorship revenue rose to a record $587 mm in 2023, a 15% increase vs the previous year
in part due to Messi joining the MLS. Even prior to the Messi effect, MLS regular season matches averaged
about the same number of TV viewers as an NHL game. Currently, NHL rights are valued at 2x MLS rights20
• Formula 1 racing is becoming more popular in the US, with races in Miami, Austin and Vegas, although the
latter event was plagued last year by course problems, damaged cars, practice delays and cancelled events.
Another sign of US viewer interest: the number of US advertising brand partners aligned with F1 or with
individual racing teams has been rising. Disney signed an agreement with F1 through 2025 to air all 23 F1
races on ABC, ESPN or ESPN2
Major League Soccer (MLS) average attendance per game F1 brand partners from the US and Europe
Attendees Number of partners
35,000 250
30,000 200
Playoffs
Europe
25,000 150
20,000 100
Regular
15,000 season
50 US
10,000
0
1996 2000 2004 2008 2012 2016 2020 2024
2018 2019 2020 2021 2022 2023
Source: MLS Media Resources, 2023 Source: Sports Business Journal, 2023
While major US sports leagues garner a lot of attention, there are emerging sports leagues that private equity
firms may consider. Some are still in their infancy with proof of concept still pending. To be clear, monetizing
“digital views” can be a difficult challenge for any company whether sports-related or not, and is an insufficient
metric for valuing anything. There’s a risk that rising valuations in emerging sports result from investors having
been priced out of major sports leagues whose valuations are soaring. And: these leagues will need to prove
they can attract streaming demand, since the declining cable industry will probably be insufficient.
• The NBA’s 12-team Africa league is valued at $1 bn based on a 2021 investment from private equity and
former NBA players Luol Deng and Dikembe Mutombo. So far, the league has generated losses and is
struggling to gain an in-person audience for its games
• A professional Drone Racing League was acquired for $250 mm in 2024 by a digital entertainment company;
the league has existed for 9 years and generated 260 mm digital views on race content in 2022-2023
• The Premier Lacrosse League raised money in 2024 at twice the league’s 2021 valuation, and signed a 4-
year deal with ESPN; last year, ESPN streamed all 48 games with peak viewership of 782,000
• Professional Bull Riding locked in a media rights relationship with CBS in 2012 after decades of paying major
broadcast channels for airtime. Aggregate TV viewership surpassed 31 mm viewers in 2023 with live events
averaging 900,000 viewers per broadcast on CBS
• Major League Pickleball: team valuations have grown 100x in 2 years to $10 mm; the MLP merged with the
Professional Pickleball Association this year, with the new entity backed by $75 mm from private equity
• SailGP: a group of investors acquired 100% ownership of the US team. The group raised capital at a valuation
believed to be nearly double the $40 mm the Great Britain team was valued at in December 202321
20
“Soccer is taking over America”, Fortune, September 9, 2023
21
“Avenue Sports Fund, celebrity investors acquire SailGP’s US Team”, Sports Business Journal, November 2023
18
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
• The UFL (United Football League): various iterations of spring football have existed since the 1970s but all
ceased operations due to lack of profitability. The UFL is the merger of two spring football leagues (XFL and
USFL), with ownership split between Dwayne Johnson, RedBird Capital and Fox. XFL partners reportedly
lost $60 million in 2023, nearly 3x their original $23.5 million investment. The UFL is paid just $6,570 per
30-second advertising spot and league attendance is just 15,000 per game. However, the league has secured
sponsorships from Under Armour, Gatorade and the US Army. UFL telecasts have averaged ~800,000
viewers per game since launch, up 27% vs XFL/USFL combined regular season averages last year
Some women’s sports have been rising in popularity, although profitability measures are mixed:
• Revenue generated by women’s professional sports leagues is expected to surpass $1 billion for the first
time in 2024 according to a report from Deloitte. The 2023 FIFA Women’s World Cup Tournament generated
$570 million in ad revenue; this compares to $7.6 billion in revenue from the FIFA Men’s World Cup
• The surge in NCAA tournament viewers for the women’s bracket is a notable example (see chart). With
respect to the Olympics, a 2021 survey found that interest in women’s events practically matched interest
in men’s events. Gymnastics has been the most watched Olympic Sport since 1996, with 38.7 million
viewers tuning in to watch the US women’s gymnastics team win a gold medal in 2012 (the team also won
a gold medal in 2016)
• WNBA attendance of 8,000 to 10,000 per game is roughly 50% of NBA levels, which doesn’t sound bad.
However, WNBA league revenues of $200 million are just 2% of NBA levels. As a result, the valuation gap is
less about in-game attendance and more about ticket prices, jersey sales, broadcast revenues and other
economics. As for the possibility of a positive Caitlin Clark effect, based on the frequency of hard fouls she
has been receiving since joining the league and the potential for injury, it might not last long
• National Women's Soccer League (NWSL) club valuations have risen following announcement of a four-year
$60 mm per year broadcast deal with ESPN, CBS, Amazon and Scripps; the prior broadcast deal was worth
only $1.5 mm per year. In March 2024, San Diego Wave FC sold for $113 million, nearly doubling the league's
previous record sale of $63 mm two months earlier; the team was purchased in 2022 for just $2 million. A
Sixth Street-led consortium invested $125 mm to launch the latest NWSL expansion team, Bay FC. The
team's first game in March sold out all 18,000 tickets. The proposed Angel City FC sale follows board tension
over the team's large spending habits; while it is the most valuable NWSL team, the club is still not profitable
NCAA division 1 championship viewership WNBA attendance vs net revenues
Viewers (millions) Average attendance per game Gross revenue, million US$
30 12,000 $240
10 Women
4,000 $80
5 2,000 $40
0 0 $0
1995 2000 2005 2010 2015 2020 2025 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024
Source: Nielsen, Sports Media Watch, JPMAM, 2024 Source: Across the Timeline (WNBA Records), Bloomberg, JPMAM, 2024
19
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Stadiums and subsidies: a controversial source of value for sports team owners
Public subsidies for open air stadiums and domed/retractable roof arenas are one of the more hotly debated
topics in sports economics. As shown in the first chart, the publicly funded share of these facilities has been
substantial since the 1970s. While the public share of construction costs have been falling, facilities are
becoming more technologically advanced and expensive to build, resulting in rising inflation-adjusted public
dollars spent. The median share of public financing over the entire period is 61%, but as shown on the right this
is misleading; some facilities get no public support22 and others get plenty of it.
Public funding is of substantial value to sports team owners. The third chart shows select examples of facility
costs as a percentage of estimated franchise value. One example of a boost from public funding: once among
the least valuable NFL franchises, after securing $750 million in taxpayer funding for a new stadium in Las Vegas,
the valuation of the Raiders rose from $1.4 billion in 2015 to more than $6 billion today.
Stadium and arena median construction costs by decade Public funding share of total stadium construction costs
2020 US$, millions Number of venues since 1990
$2,000 25
Median = 61%
$1,800 Arena total cost Stadium total cost
$1,600 Public cost Public cost 20
$1,400
$1,200 15
$1,000
$800 10
$600
$400 5
$200
$0 0
1970s 1980s 1990s 2000s 2010s 2020s 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Source: "Sports Venue Construction Costs", Bradbury et al, JPMAM, July 2023 Source: "Public Policy Toward Sports Stadiums", Bradbury et al, July 31, 2023
60%
Pittsburgh Penguins
Pittsburgh Steelers
San Antonio Spurs
Cincinnati Bengals
Memphis Grizzlies
Pittsburgh Pirates
Indianapolis Colts
50%
San Diego Padres
Charlotte Hornets
Houston Rockets
Edmonton Oilers
Arizona Coyotes
Houston Texans
Denver Broncos
Cincinnati Reds
Minnesota Wild
$3
Orlando Magic
40%
Miami Marlins
30% $2
20% $1
10%
$0
0% 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024
Source: Bradbury et al stadium data, Forbes, JPMAM, 2024 Source: Forbes, Bloomberg, JPMAM, 2024
22
The most expensive sports stadium ever built is SoFi Stadium (home to the LA Rams and Chargers) which cost
$5.5 bn and which was 100% privately financed. Separately, in April 2024, voters in Kansas City rejected a
measure to renew a 40-year sales tax to subsidize a downtown stadium for the Kansas City Royals
20
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Here's where the controversy lies. According to a meta-study published in April 202223, the economic rationale
for subsidizing professional sports facilities is weak despite arguments that such projects catalyze local economic
development. The 130 individual studies that the authors analyzed measured economic benefits by looking at
income, employment, retail sales, tax receipts, hotel occupancy/room rates and housing values in the wake of
stadium completion. The authors found clear consensus in the economic literature: the value of stadium
subsidies is typically much larger than the value of economic benefits that result from their addition to a
community. One reason why: increases in sports-related consumer spending after a new stadium is built are
shifts from other local consumer spending, not net-new spending. As a result, subsidies end up as wealth
transfers from taxpayers to sports team owners.
The authors cite two surveys as confirmation of their findings: panels of economic experts strongly agreed that
subsidies should be eliminated, and that they cost taxpayers more than economic benefits generated:
Local and state governments in the US should eliminate Providing state & local subsidies to build stadiums for pro
subsidies to professional sports franchises sports teams is likely to cost the relevant taxpayers more
than any local economic benefits that are generated
Strongly agree
Strongly agree
Agree
Agree
Neutral
Neutral
Disagree Disagree
0% 10% 20% 30% 40% 50% 60% 0% 10% 20% 30% 40% 50% 60% 70%
Share of American Economic Association member surveyed Share of IGM panel of economic experts surveyed
Source: Bradbury et al, Journal of Economic Studies, April 2022 Source: Bradbury et al, Journal of Economic Studies, April 2022
Despite the evidence, stadium subsidies continue in many jurisdictions. This issue will become increasingly
important for league owners and local governments in the years ahead. A new wave of stadium construction
appears imminent given the median age of existing facilities across the four major sports leagues (24 years) and
the typical 30-year stadium replacement cycle. The chart below shows the age of each facility by league; by
2030, 30 facilities will be at least 30 years old, which is roughly 25% of all stadiums.
Stadium ages by league
Lesser of stadium age and age since renovation, years
40
35 MLB
30 NHL
25
NBA
20
NFL
15
10
5
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31
Teams ranked by stadium/arena age from oldest to newest
Source: "Economics of Stadium Subsidies”, Bradbury et al, January 2023
23
“Impact of Sports Franchises/Venues on Local Economies”, Bradbury, Journal of Economic Studies, April 2022
21
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
1 CAA FBASH $971 $18.0 TPG, CMC, Temasek, Pinault, Taiwan Mobile
2 Wasserman FBASHGORE $733 $9.0 Providence, Madrone
3 WME Sports FBTG $588 $6.0 Silver Lake, KKR, DFO
4 Excel Sports Management BAG $499 $6.0 Shamrock
5 Octagon FBAHSGTO $212 $3.0 Interpublic
6 Boras Corporation A $206 $4.0 n/a
7 Roc Nation Sports FBASRC $203 $3.0 Live Nation
8 Athletes First F $181 $5.0 General Catalyst, Mosaic
9 Klutch Sports Group FB $100 $2.0 EQT, United Talent Agency
10 You First BS $93 $1.0 Alia, ASM Sports
11 GSE Worldwide FGT $87 $0.8 n/a
12 Newport Sports Management H $76 $2.0 n/a
13 Rep 1 Sports FAB $60 $2.0 EQT, United Talent Agency
14 Priority Sports & Entertainment FB $55 $1.0 n/a
15 Independent Sports & Entertainment FAB $54 $1.0 Yucaipa
F: Football, B: Basketball, A: Baseball, S: Soccer, H: Hockey, G: Golf, O: Olympics, R: Rugby, E: Extreme sports, T: Tennis, C: Cricket. Sources: Forbes
2022 (commissions and contracts), JPMAM 2024 (sources of funding)
24
“Fanatics Outlook Revised to Negative as Ratings Affirmed”, S&P Global, October 13 2023
22
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Sports betting: Supreme Court rulings, parlays and fantasy sports regulatory arbitrage
“I spent half my money on gambling, alcohol and women. The other half I wasted” – WC Fields
After the US Supreme Court25 overturned a federal ban on sports gambling in 2018, the sports betting industry
was off to the races. Individual states can now decide whether to make sports betting legal, which 38 states
have now done (in 8 of them, online betting is not permitted, only in-person betting). Some large remaining
states that have yet to legalize sports seem unlikely to do so soon; voters in California defeated two separate
sports betting initiatives in 2022. While land-based casino gaming and retail sports betting revenues have been
flat since 2021, online sports betting revenues are gradually rising and now represent 18% of all commercial
gaming revenues. US bettors are spending (i.e. losing) $700 million to $1 billion per month.
US commercial gaming revenue by vertical US monthly sports-betting revenue
US$, billions Billions, US$ # of legalized states
$18 $1.6 40
iGaming Number of legalized states
$16 $1.4 35
$14 Online sports betting $1.2 30
$12
$1.0 25
$10
$8 $0.8 20
$6 $0.6 Revenue 15
Land-based gaming
$4 (casinos slots, table games
and retail sports betting) $0.4 10
$2
$0.2 5
$0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 $0.0 0
2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 2023 2023 2024 2018 2019 2020 2021 2022 2023
Source: American Gaming Association, Q1 2024 Source: "Legal Sports Betting Revenue", Sportshandle.com, JPMAM, May 29, 2024
Publicly traded sports betting stocks (DraftKings, Flutter-FanDuel and Entain) rose in 2020/2021 but gave up
their gains in the 2022 correction of high-flying growth stocks. While some have recovered from their lows, they
all underperformed the S&P 500 and the Russell 1000 Consumer Discretionary Index since June 2020. Note that
three of the most well-known sports betting companies still have negative operating margins. There’s also a
sports betting and iGaming ETF with over 30 holdings that provides exposure to the sector, but most of its
component companies with online sports betting platforms are part of bigger diversified companies that are not
pure plays on sports betting (MGM Resorts, Caesars Entertainment, Penn Entertainment, Bally’s, Boyd Gaming).
Sports betting stock performance
Index (100 = June 1, 2020)
300
Operating margins
DraftKings (-21.5%)
250 Flutter (-4.7%)
Entain (-12.6%)
200
150 Flutter
100 DraftKings
Entain
50
0
Jun-20 Jun-21 Jun-22 Jun-23 Jun-24
Source: Bloomberg, JPMAM, May 30, 2024
25
States Rights. The Supreme Court’s “just let the states decide” movement is being applied to immigration,
abortion rights, foster care, gun rights, voting rights, sports gambling and other issues. Let’s wait 15-20 years;
I’m willing to bet that this revived States Rights movement is not going to make the United States a better place.
23
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Sports parlays. Parlay bets are a way of combining wagers to offer higher payout odds; these combined wagers
can be made on different sporting events or on various aspects of the same game. The number of bettors using
parlays is growing, with FanDuel reporting 90% of active users having placed a same-game parlay. This trend
benefits sportsbooks since parlays tend to have higher profit margins than straight bets. Data from Illinois26
reveals average profit on parlays is 18% compared to just 5% on straight bets. This higher profit margin is
partially offset by the fact that the average straight bet is 5-6x larger than parlay bets. Additionally, sportsbooks
have reported that parlays lead to higher customer retention than other types of bets.
Increase in parlay bets Size and profitability: straight bet vs parlay bet
Parlay bet share of total bets placed Average size, US$ Profit margin
80% $160 Average straight bet size 25%
$140 Average parlay bet size
70% FanDuel 20%
Straight bet profit margin
$120
Parlay profit margin
60%
$100 15%
DraftKings
50% PointsBet $80
BetRivers $60 10%
40% BetMGM
Caesars $40
30% 5%
Barstool $20
20% $0 0%
Caesars
BetMGM
BetRivers
Barstool
PointsBet
DraftKings
FanDuel
10%
0%
2020 2021 2022 2023
Source: Sports Business Journal, September 2023 Source: Sports Business Journal, December 2023
DraftKings Fantasy
4
• However, states such as California and Texas do
FanDuel Fantasy
Underdog
Barstool
2
Caesars
26
“Import of same-game multi-bets brings U.S. operators together”, Sports Business Journal, December 2023.
The parlay charts above reflect data from Illinois, which requires sportsbooks to disclose how much bettors
wager, how many bets they place, the type of bets and the profit margins earned
24
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Headwinds. Players in all four major North American sports leagues have been caught up in sports betting
scandals which have resulted in suspensions or permanent bans. The NCAA is pushing for a ban on college prop
bets in order to preserve what they describe as “the integrity of competition” and to protect student and
professional athletes from getting harassed by bettors.
Other headwinds include states like Florida sending fantasy sports betting companies PrizePicks, Underdog and
Betr cease and desist letters which accused the companies of offering illegal bets or wagers. Fantasy companies
typically argue that they offer “games of skill” rather than gambling since success depends on knowledge; Florida
disagrees, saying that fantasy sports prizes must be set and announced in advance, and not tied to the number
of participants or amount of fees.
There’s also the issue of sports gambling addiction and the inevitable flood of class action lawsuits and industry
restrictions, some of which have already begun27:
• The Connecticut Council on Problem Gambling saw a 91% increase in calls in 2022, the first year the state
legalized gambling. Calls to the New Jersey Council on Compulsive Gambling hotline tripled since gambling
was legalized in 2019
• The University of New Mexico Center on Alcohol, Substance Use and Addictions found a high level of
correlation between binge drinking and sports gambling
• An NCAA survey of 3,527 college age students shows how sports betting has become commonplace. Nearly
60% bet on sports and 4% do so daily. Almost 6% reported losing more than $500 in a single day
• The UK Committee of Advertising Practice banned betting advertisements that feature former sports stars
and social media influencers. In addition, betting firms are prevented from including team uniforms and
stadiums in ad campaigns and from showing video game content. In the Netherlands, all advertising and
sponsoring of online gambling is now prohibited. The Dutch Parliament also barred former and present
sports celebrities from taking part in promotions for online betting
Gambling addictions may be harder to overcome than other addictions: only 30% of addicted gamblers
successfully refrain from betting after receiving treatment, while post-treatment recovery rates are higher for
alcohol addiction (70%-80%), drug addiction (75%) and sex addiction (64%)28.
27
Sources include Forbes, Time Magazine, Yahoo News
28
Sources include Health Central, Frontiers in Psychiatry, AddictionHelp.com, American Journal of Drug and
Alcohol Abuse, CDC, National Institute on Drug Abuse, Hazelden Betty Ford Foundation
25
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
The esports winter continues: poor business fundamentals, layoffs and league terminations
Of all the things I have seen investors embrace that flamed out (metaverse, hydrogen, P2P lending, cannabis),
esports looks the most absurd in the light of day. After millions of dollars flooded into esports in 2021 (and to
be clear, I have strong objections to describing it as a “sport”), advertisers and event sponsors slashed spending
amidst evidence of falling viewership and insufficient return on investment. The first chart shows declining
viewership and hours watched for the “League Championship Series”, the top professional US/Canada League
of Legends competition. The surge in esports viewership in 2020 might in retrospect have partially included
viewers unable to consume traditional sports content due to COVID. Advertising partnerships are further
complicated by esports viewers who are more likely to use ad blockers, which decreases advertising reach.
Unmet expectations. FaZe Clan, a conglomerate of pro gamers, streamers and “online personalities” (don’t ask)
went public via SPAC (the corporate finance kiss of death29) in 2022. Elevated spending reportedly plagued the
company before 40% of its staff was laid off in May 202330. Its shares fell by 24% on the first day of trading and
fell 99% from its IPO price before being taken private by GameSquare Holdings in March 2024.
More e-stress, and this is just a partial list:
• Madison Square Garden attempted to sell its esports team but was reportedly unable to recoup its costs.
Instead, MSG group laid off dozens of gaming employees and merged its remaining assets with NRG. MSG
did not receive a payment from the deal; it actually paid NRG several million dollars to take on the costs of
the esports facilities and the salaries of the remaining employees31
• Amazon cut its gaming/streaming headcount twice in 2023
• The Overwatch League voted to shut down operations entirely in 2023 after six seasons, with Microsoft
reportedly at risk of losing $120 million in compensation payouts32
• Activision laid off most of its esports teams, negatively impacting the Call of Duty league that it managed
• The esports and video game coaching platform ProGuides will wind down operations at the end of May
All is not lost, at least not just yet. While US viewership of League of Legends has declined, it continues to rise
globally. Esports companies have announced several new brand partnerships and renewals in 2024. One
example is Riot Games which announced sponsorships with brands such as Kia, HyperX, KitKat and Omen. But
despite these new sponsors, Riot still laid off over 500 staff in January. Some venture funds show interest in
esports, but with a focus on infrastructure and data analytics rather than esports leagues themselves.
US/Canada League Championship Series viewership FaZe Holdings stock performance
Thousands Millions US$
600 40 $20
$18
Peak viewers 35
500 $16
30
$14
400
25 $12
300 20 $10
15 $8
200 Total hours
$6
watched 10
100 $4
5
$2
0 0 $0
04/20 10/20 04/21 10/21 04/22 10/22 04/23 10/23 04/24 Jul-22 Jan-23 Jul-23 Jan-24
Source: Esports Charts, May 2024 Source: Bloomberg, JPMAM, March 8, 2024
29
See section 2 in “The impact of underperforming 2020 and 2021 US IPOs”, Eye on the Market, July 2023
30
“Here’s what ultimately led to the fall of FaZe Clan”, DigiDay, November 2023
31
“The E-Sports World is Starting to Teeter”, New York Times, May 2023
32
“Overwatch League Shutdown May Cost Microsoft $120 Million”, Game 8, November 2023
26
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Appendix I: US sports leagues mostly function as unregulated monopolies under the Sherman Act
While the Sherman Act (federal antitrust law) would normally be expected to apply to US professional sports
leagues, it has rarely been used to curtail the established monopoly status of US sports teams and the unique
level of coordination and cooperation across teams that routinely takes place. The net result: sports team
owners are able to earn monopoly rents from the viewing public and from municipalities as well.
While the NFL, NBA, and NHL have each been subject to the Sherman Antitrust Act for over 60 years, the MLB
has been exempt from federal antitrust law since 1922 when the Supreme Court ruled that its operations did
not constitute interstate commerce. Even so, in most respects the MLB structures its operations consistent with
other professional leagues, behaving as if it were subject to the Sherman Act as well.33
While the Sherman Act does in principle apply to professional sports, the courts tend to apply a “rule of reason”
to league activity: some anticompetitive restraints are necessary to encourage competitive balance among the
league’s teams and ensure the league’s long-term viability. For example, anti-collusion restrictions in Section
One of the Sherman Act34 would be impossible/impractical to apply to professional sports. In addition, most
significant league decisions require approval of a majority or supramajority of owners, which would similarly be
considered anticompetitive in other industries, but not in professional sports.
Other examples and issues related to anti-trust law and US professional sports:
• From 1973 to 2011, the NFL refused to allow games that were not sold out 72 hours in advance to be
televised in the home team city (the rule was relaxed in 2012 to 85% of available tickets). No antitrust
actions have been taken regarding this policy since 1961. Similarly, courts in Pennsylvania affirmed an NFL
rule preventing other games from being broadcast into a home team’s market, even while acknowledging
that this technically violates the Sherman Act; the courts cited overriding concerns regarding negative
financial effects on the league
• Class action litigants are currently contesting the legality of the NFL’s exclusive license of its bundled Sunday
Ticket package (such rights were originally licensed by DirecTV and are now licensed by YouTube). Plaintiffs
argue that teams should be required to independently sell broadcast rights to different bidders, rather than
the NFL’s current approach of pooling all rights and selling them collectively
• In a 2010 decision (American Needle), the Supreme Court rejected the NFL’s argument that when applied to
licensing of intellectual property, it was acting as a single entity which was incapable of violating Section
One of the Sherman Act. In other words, the Court found that the NFL acted as multiple entities and was
therefore subject to the Sherman Act; it remanded the case to district courts where it was settled after 11
years of litigation. This American Needle case is in the headlines again now that a retailer has sued the NFL
and Fanatics for conspiring to dominate the retail market for online sales of NFL licensed apparel in violation
of antitrust laws (the NFL owns 3% of Fanatics)
• Courts on occasion side with owners challenging league rules. For example, courts held that rules banning
public ownership of teams, and rules preventing owners from acquiring an interest in a team in a competing
league, both violate the Sherman Act. The courts also sided with owners on relocation. In Los Angeles
Memorial Coliseum Commission v. National Football League, the Ninth Circuit held that the NFL policy
requiring franchise moves be approved by three-fourths of owners constituted illegal restraint of trade
33
“Regulating professional sports leagues”, Washington & Lee Law Review, Nathaniel Grow, 2015
34
Section 2 of the Sherman Act generally only applies when firms maintain dominant positions via exclusionary
practices to prevent a rival from entering the market. To date, courts have not found that US leagues violate
this provision; high barriers of entry are the primary factor preventing competitive leagues from thriving. In
1986, a college friend went to work for McKinsey. He was staffed on an 18-month project designed to provide
economic evidence supporting the USFL antitrust lawsuit against the NFL. A jury found the NFL guilty of acting
as a monopoly but only awarded the USFL a symbolic $1 award which was trebled according to antitrust law
to $3. He left consulting after that and went to LA to work in television programming.
27
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
$10
2021 Jacksonville Jaguars (18%)
$200
2016 San Francisco 49ers (13%)
2020 Jacksonville Jaguars (6%)
$40 $2
$0 $0
Source: JPMAM, 2024 Source: JPMAM, 2024
The most costly seasons in the MLB since 2000 The most costly seasons in the NHL since 1989
Payroll cost per win (2023 million US$), win rate in parentheses Payroll cost per win (2023 million US$), win rate in parentheses
$5 $6
2016 Colorado Avalanche (27%)
$5
2013 New York Yankees (52%)
$4
2018 Baltimore Orioles (29%)
$4
$3
$3
$2
$2
$1
$1
$0 $0
Source: JPMAM, 2024 Source: JPMAM, 2024. 2008-2010 seasons not included due to lack of data.
35
“10 weird things the Baltimore Orioles did in 2018”, The New York Times, October 30, 2018
28
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
36
Just missed the MEV cutoff for the top 250 players: Richard Jefferson, Trevor Ariza, Metta World Peace, Pete
Maravich, Damon Stoudamire, Paul Westphal, Michael Cage
29
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Sam Lacey
Brad Miller
Charles Barkley Bob Lanier
Tom Chambers
Vlade Divac
Jack Sikma Larry Nance
Mychal Thompson
Shawn Marion
Joel Embiid Sam Perkins
Dirk Nowitzki
Terry Cummings Chet Walker
Wes Unseld Dave Cowens
Pau Gasol Kareem Abdul-Jabbar
Maurice Lucas Karl-Anthony Towns
Antawn Jamison
Jack Twyman
Charles Oakley Horace Grant Otis Thorpe Nikola Vucevic Dave DeBusschere Rasheed Wallace
David Lee Derrick Coleman
Carlos Boozer
Rudy Tomjanovich Elgin Baylor
Tim Duncan Bob McAdoo
Shawn KempHakeem Olajuwon Chris Bosh LaMarcus Aldridge Paul Arizin
David Robinson
Bill Bridges Dan Roundfield Elton BrandAnthony Davis Zach Randolph
P.J. Brown Kevin Love Brook Lopez
Ben Wallace Paul Silas Bill Laimbeer Antonio McDyess Bill Cartwright
Marcus Camby A.C. Green
Kevin McHale
Artis GilmoreWalt Bellamy Dolph Schayes
Jerry Lucas Spencer Haywood
Amar'e Stoudemire
Dennis Rodman
Buck Williams Shaquille O'Neal Al Jefferson
Happy Hairston
Bill Russell Nate ThurmondWilt ChamberlainPatrick Ewing Bailey Howell
Andre Drummond
Rudy Gobert Dwight Howard
Robert Parish
Tyson Chandler
Jermaine O'Neal
Red Kerr Bob Pettit
DeAndre Jordan Jonas Valanciunas
Dikembe Mutombo
Elvin Hayes
Willis Reed Kevin Willis
Font size reflects Model Estimated Value based on points, field goal and free throw percentage, blocks, offensive and defensive rebounds, assists, steals, turnovers and personal fouls.
The NBA is a trademark or registered trademark of NBA Properties, Inc. All brands, sports or entertainment
figures identified are used strictly in a referential sense and are not affiliated with, connected to, or sponsored
by JPMorgan Chase & Co.
30
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
9x
25%
8x
7x 20%
6x
5x 15%
4x
10%
3x
2x 5%
1998 2002 2006 2010 2014 2018 2022 1998 2002 2006 2010 2014 2018 2022
Source: Forbes, JPMAM, 2024 Source: Forbes, JPMAM, 2024
31
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
7x 15%
6x 10%
5x
5%
4x
3x 0%
2x -5%
1998 2002 2006 2010 2014 2018 2022 1998 2002 2006 2010 2014 2018 2022
Source: Forbes, JPMAM, 2024 Source: Forbes, JPMAM, 2024
32
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
12x
15%
10x
8x 10%
6x 5%
4x
0%
2x
0x -5%
1998 2002 2006 2010 2014 2018 2022 1998 2002 2006 2010 2014 2018 2022
Source: Forbes, JPMAM, 2024 Source: Forbes, JPMAM, 2024
33
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
2x -5%
1x -10%
1998 2002 2006 2010 2014 2018 2022 1998 2002 2006 2010 2014 2018 2022
Source: Forbes, JPMAM, 2024 Source: Forbes, JPMAM, 2024
34
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
There are a few notable examples of player departures in US sports leagues due to free agency, players being
traded or players retiring. While the impact on team performance can be substantial (see chart below), the
revenue sharing and other features described in this paper would likely mitigate to a large extent any possible
financial impact on team owners from declining team performance.
Major US sports departures
Team winning percentage
90%
10%
1972- 1975- 1973- 1976- 1973- 1976- 1990- 1993- 1993- 1996- 1998- 2001- 2007- 2010- 1995- 1998-
1974 1977 1975 1978 1975 1978 1992 1995 1995 1998 2000 2003 2009 2012 1997 2000
Kareem Abdul- Julius Erving Reggie Barry Bonds Shaquille Manny LeBron James Michael Jordan
Jabbar Jackson O'Neal Ramirez
Source: Baseball Reference, NBA, JPMAM, 2024
35
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
IMPORTANT INFORMATION
KEY RISKS
This material is for information purposes only, and may inform you of certain products and services offered by private banking businesses, part of
JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance
with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are
a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at
[email protected] for assistance. Please read all Important Information.
GENERAL RISKS & CONSIDERATIONS
Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less
than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or
protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider
carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are
suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy
prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan
team.
NON-RELIANCE
Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or
completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No
representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided
for illustration/ reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on
current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that
such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views
expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are
based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements
should not be considered as guarantees or predictions of future events.
Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in
this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P.
Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and
employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial
transactions.
YOUR INVESTMENTS AND POTENTIAL CONFLICTS OF INTEREST
Conflicts of interest will arise whenever JPMorgan Chase Bank, N.A. or any of its affiliates (together, “J.P. Morgan”) have an actual or perceived economic
or other incentive in its management of our clients’ portfolios to act in a way that benefits J.P. Morgan. Conflicts will result, for example (to the extent
the following activities are permitted in your account): (1) when J.P. Morgan invests in an investment product, such as a mutual fund, structured product,
separately managed account or hedge fund issued or managed by JPMorgan Chase Bank, N.A. or an affiliate, such as J.P. Morgan Investment Management
Inc.; (2) when a J.P. Morgan entity obtains services, including trade execution and trade clearing, from an affiliate; (3) when J.P. Morgan receives payment
as a result of purchasing an investment product for a client’s account; or (4) when J.P. Morgan receives payment for providing services (including
shareholder servicing, recordkeeping or custody) with respect to investment products purchased for a client’s portfolio. Other conflicts will result because
of relationships that J.P. Morgan has with other clients or when J.P. Morgan acts for its own account.
Investment strategies are selected from both J.P. Morgan and third-party asset managers and are subject to a review process by our manager research
teams. From this pool of strategies, our portfolio construction teams select those strategies we believe fit our asset allocation goals and forward-looking
views in order to meet the portfolio's investment objective.
As a general matter, we prefer J.P. Morgan managed strategies. We expect the proportion of J.P. Morgan managed strategies will be high (in fact, up to
100 percent) in strategies such as, for example, cash and high-quality fixed income, subject to applicable law and any account-specific considerations.
While our internally managed strategies generally align well with our forward-looking views, and we are familiar with the investment processes as well
as the risk and compliance philosophy of the firm, it is important to note that J.P. Morgan receives more overall fees when internally managed strategies
are included. We offer the option of choosing to exclude J.P. Morgan managed strategies (other than cash and liquidity products) in certain portfolios.
The Six Circles Funds are U.S.-registered mutual funds managed by J.P. Morgan and sub-advised by third parties. Although considered internally managed
strategies, JPMC does not retain a fee for fund management or other fund services.
LEGAL ENTITY, BRAND & REGULATORY INFORMATION
In the United States, bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A.
Member FDIC.
JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB”) offer investment products, which may include bank managed investment accounts and
custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through
J.P. Morgan Securities LLC (“JPMS”), a member of FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a
licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the
common control of JPM. Products not available in all states.
In Germany, this material is issued by J.P. Morgan SE, with its registered office at Taunustor 1 (TaunusTurm), 60310 Frankfurt am Main, Germany,
authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche
Bundesbank) and the European Central Bank (ECB). In Luxembourg, this material is issued by J.P. Morgan SE – Luxembourg Branch, with registered office
at European Bank and Business Centre, 6 route de Treves, L-2633, Senningerberg, Luxembourg, authorized by the Bundesanstalt für
Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central
Bank (ECB); J.P. Morgan SE – Luxembourg Branch is also supervised by the Commission de Surveillance du Secteur Financier (CSSF); registered under
R.C.S Luxembourg B255938. In the United Kingdom, this material is issued by J.P. Morgan SE – London Branch, registered office at 25 Bank Street,
Canary Wharf, London E14 5JP, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German
Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE – London Branch is also supervised by the Financial Conduct
Authority and Prudential Regulation Authority. In Spain, this material is distributed by J.P. Morgan SE, Sucursal en España, with registered office at Paseo
de la Castellana, 31, 28046 Madrid, Spain, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin,
the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE, Sucursal en España is also supervised by the
Spanish Securities Market Commission (CNMV); registered with Bank of Spain as a branch of J.P. Morgan SE under code 1567. In Italy, this material is
distributed by J.P. Morgan SE – Milan Branch, with its registered office at Via Cordusio, n.3, Milan 20123, Italy, authorized by the Bundesanstalt für
36
EYE ON THE MARKET • MICHAEL CEMBALEST • J.P. MORGAN • June 6, 2024
2024 Outlook / 2024 energy paper / US inflation monitor / US Federal debt monitor
Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central
Bank (ECB); J.P. Morgan SE – Milan Branch is also supervised by Bank of Italy and the Commissione Nazionale per le Società e la Borsa (CONSOB); registered
with Bank of Italy as a branch of J.P. Morgan SE under code 8076; Milan Chamber of Commerce Registered Number: REA MI 2536325. In the Netherlands,
this material is distributed by J.P. Morgan SE – Amsterdam Branch, with registered office at World Trade Centre, Tower B, Strawinskylaan 1135, 1077
XX, Amsterdam, The Netherlands, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the
German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE – Amsterdam Branch is also supervised by De
Nederlandsche Bank (DNB) and the Autoriteit Financiële Markten (AFM) in the Netherlands. Registered with the Kamer van Koophandel as a branch of
J.P. Morgan SE under registration number 72610220. In Denmark, this material is distributed by J.P. Morgan SE – Copenhagen Branch, filial af J.P. Morgan
SE, Tyskland, with registered office at Kalvebod Brygge 39-41, 1560 København V, Denmark, authorized by the Bundesanstalt für
Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central
Bank (ECB); J.P. Morgan SE – Copenhagen Branch, filial af J.P. Morgan SE, Tyskland is also supervised by Finanstilsynet (Danish FSA) and is registered with
Finanstilsynet as a branch of J.P. Morgan SE under code 29010. In Sweden, this material is distributed by J.P. Morgan SE – Stockholm Bankfilial, with
registered office at Hamngatan 15, Stockholm, 11147, Sweden, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and jointly
supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE – Stockholm Bankfilial is
also supervised by Finansinspektionen (Swedish FSA); registered with Finansinspektionen as a branch of J.P. Morgan SE. In Belgium, this material is
distributed by J.P. Morgan SE – Brussels Branch with registered office at 35 Boulevard du Régent, 1000, Brussels, Belgium, authorized by the Bundesanstalt
für Finanzdienstleistungsaufsicht (BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central
Bank (ECB); J.P. Morgan SE Brussels Branch is also supervised by the National Bank of Belgium (NBB) and the Financial Services and Markets Authority
(FSMA) in Belgium; registered with the NBB under registration number 0715.622.844. In Greece, this material is distributed by J.P. Morgan SE – Athens
Branch, with its registered office at 3 Haritos Street, Athens, 10675, Greece, authorized by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)
and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB); J.P. Morgan SE – Athens
Branch is also supervised by Bank of Greece; registered with Bank of Greece as a branch of J.P. Morgan SE under code 124; Athens Chamber of Commerce
Registered Number 158683760001; VAT Number 99676577. In France, this material is distributed by J.P. Morgan SE – Paris Branch, with its registered
office at 14, Place Vendôme 75001 Paris, France, authorized by the Bundesanstaltfür Finanzdienstleistungsaufsicht(BaFin) and jointly supervised by the
BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB) under code 842 422 972; J.P. Morgan SE – Paris Branch is
also supervised by the French banking authorities the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the Autorité des Marchés Financiers
(AMF). In Switzerland, this material is distributed by J.P. Morgan (Suisse) SA, with registered address at rue du Rhône, 35, 1204, Geneva, Switzerland,
which is authorised and supervised by the Swiss Financial Market Supervisory Authority (FINMA) as a bank and a securities dealer in Switzerland.
This communication is an advertisement for the purposes of the Markets in Financial Instruments Directive (MIFID II) and the Swiss Financial Services Act
(FINSA). Investors should not subscribe for or purchase any financial instruments referred to in this advertisement except on the basis of information
contained in any applicable legal documentation, which is or shall be made available in the relevant jurisdictions (as required).
In Hong Kong, this material is distributed by JPMCB, Hong Kong branch. JPMCB, Hong Kong branch is regulated by the Hong Kong Monetary Authority and
the Securities and Futures Commission of Hong Kong. In Hong Kong, we will cease to use your personal data for our marketing purposes without charge
if you so request. In Singapore, this material is distributed by JPMCB, Singapore branch. JPMCB, Singapore branch is regulated by the Monetary Authority
of Singapore. Dealing and advisory services and discretionary investment management services are provided to you by JPMCB, Hong Kong/Singapore
branch (as notified to you). Banking and custody services are provided to you by JPMCB Singapore Branch. The contents of this document have not been
reviewed by any regulatory authority in Hong Kong, Singapore or any other jurisdictions. You are advised to exercise caution in relation to this document.
If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. For materials which constitute
product advertisement under the Securities and Futures Act and the Financial Advisers Act, this advertisement has not been reviewed by the Monetary
Authority of Singapore. JPMorgan Chase Bank, N.A., a national banking association chartered under the laws of the United States, and as a body corporate,
its shareholder’s liability is limited.
With respect to countries in Latin America, the distribution of this material may be restricted in certain jurisdictions. We may offer and/or sell to you
securities or other financial instruments which may not be registered under, and are not the subject of a public offering under, the securities or other
financial regulatory laws of your home country. Such securities or instruments are offered and/or sold to you on a private basis only. Any communication
by us to you regarding such securities or instruments, including without limitation the delivery of a prospectus, term sheet or other offering document, is
not intended by us as an offer to sell or a solicitation of an offer to buy any securities or instruments in any jurisdiction in which such an offer or a
solicitation is unlawful. Furthermore, such securities or instruments may be subject to certain regulatory and/or contractual restrictions on subsequent
transfer by you, and you are solely responsible for ascertaining and complying with such restrictions. To the extent this content makes reference to a
fund, the Fund may not be publicly offered in any Latin American country, without previous registration of such fund´s securities in compliance with the
laws of the corresponding jurisdiction.
JPMorgan Chase Bank, N.A. (JPMCBNA) (ABN 43 074 112 011/AFS Licence No: 238367) is regulated by the Australian Securities and Investment
Commission and the Australian Prudential Regulation Authority. Material provided by JPMCBNA in Australia is to “wholesale clients” only. For the
purposes of this paragraph the term “wholesale client” has the meaning given in section 761G of the Corporations Act 2001 (Cth). Please inform us if you
are not a Wholesale Client now or if you cease to be a Wholesale Client at any time in the future. JPMS is a registered foreign company (overseas) (ARBN
109293610) incorporated in Delaware, U.S.A. Under Australian financial services licensing requirements, carrying on a financial services business in
Australia requires a financial service provider, such as J.P. Morgan Securities LLC (JPMS), to hold an Australian Financial Services Licence (AFSL), unless an
exemption applies. JPMS is exempt from the requirement to hold an AFSL under the Corporations Act 2001 (Cth) (Act) in respect of financial services it
provides to you, and is regulated by the SEC, FINRA and CFTC under US laws, which differ from Australian laws. Material provided by JPMS in Australia is
to “wholesale clients” only. The information provided in this material is not intended to be, and must not be, distributed or passed on, directly or indirectly,
to any other class of persons in Australia. For the purposes of this paragraph the term “wholesale client” has the meaning given in section 761G of the
Act. Please inform us immediately if you are not a Wholesale Client now or if you cease to be a Wholesale Client at any time in the future.
This material has not been prepared specifically for Australian investors. It:
• may contain references to dollar amounts which are not Australian dollars;
• may contain financial information which is not prepared in accordance with Australian law or practices;
• may not address risks associated with investment in foreign currency denominated investments; and
• does not address Australian tax issues.
References to “J.P. Morgan” are to JPM, its subsidiaries and affiliates worldwide. “J.P. Morgan Private Bank” is the brand name for the private banking
business conducted by JPM. This material is intended for your personal use and should not be circulated to or used by any other person, or duplicated for
non-personal use, without our permission. If you have any questions or no longer wish to receive these communications, please contact your J.P. Morgan
team.
© 2024 JPMorgan Chase & Co. All rights reserved.
37