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A Franchise Bubble?

From today's WSJ:

Are sports-franchise prices headed for a tumble? Boom-time euphoria has vanished from the stock and real-estate markets. But the cost of acquiring a sports team keeps climbing in the face of a weakening economy, preserving what may be one of the last asset bubbles in North America.

...Even for plutocrats, the sums involved in owning major-league teams have become big enough that they can't be laughed off. Top franchises in the National Football League are seen as $1 billion properties. Many U.S. baseball and basketball teams are valued at $400 million or more. Even smaller-market teams in the National Hockey League trade hands for $200 million.

Profitable sports franchises may be priced at 20 times annual cash flow, at least double the valuation of a mundane company with similar prospects.

"Bubble" is an over-used term. Asset prices for sports franchises have soared, and have high PE multiples, because of sustained high revenue growth over decades. When that stops, the multiple will come down. But that is hardly then end of a bubble, it is just rational re-pricing.