JetBlue buys Spirit Airlines for $3.8 billion, but it takes $4.65 billion to buy the Denver Broncos
“It’s like Nordstrom buying the Dollar Store.”
That’s how David Siegel, an airline executive, characterized JetBlue’s purchase of Spirit Airlines. The JetBlue model is amenities. The Spirit Airlines model is no amenities, not even basics. If nickle-and-dimeing were a crime, Spirit Airlines would be serving a life sentence. What is JetBlue doing? After all, Nordstrom does not merge with the Dollar Store.
So how do these two airlines merge? They don’t, say the skeptics. The federal authorities will not approve the merger. Two totally different airline cultures. Apples and oranges.
Note: No skepticism here about the actual $3.8 billion JetBlue is prepared to pay, even though JetBlue inflated its offer in order to beat out competitor Frontier Airlines.
Note: No skepticism about another recent price, either — the price paid for the Denver Broncos: $4.65 billion.
That’s 9.3 times the estimated Broncos revenue of 2021.
That’s 24% above Forbes valuation of the Broncos franchise at $3.75 billion one year ago.
That raises the value — overnight — of all of the other 31 NFL teams by 12% — or so said Forbes just a few weeks ago. Earlier this week, a report released by Sportico valued the Dallas Cowboys at $7.65 billion, thus raising — overnight — the value of all the other NFL teams by 18%. Truly, a new way of investing!
Airlines transport people. Even small airlines — even an annoying one, such as Spirit Airlines —facilitate commerce, family connectedness, employment for thousands of people in hundreds of places, and benefits for hundreds of thousands of travelers: mourners, tourists, politicians, inventors, physicians, attorneys, authors, pilgrims and who knows who else.
Even a small airline makes it possible for all these types of travelers to come and go in order to inspire or to be inspired, to learn or to teach, to persuade or to be persuaded, not to mention to relax, to refresh, to be together.
All this is worth . . . $3.8 billion — not even close to double the 2021 income of Spirit Airlines, let alone 9.3 times the 2021 income of the Denver Broncos.
Yet, this one single football team, which, at best, provides entertainment 17 times a year (three of four more times if it wins the Super Bowl), and not even exclusively in its home town, and not for more than a few hours at one time, and not even winning every game; and which does not employ thousands of people and does not facilitate commerce . . . all this is worth $4.65 billion.
True enough, the Broncos provide a communal uplift; Spirit Airlines only a literal lift. Still, when all is said and done, if ever there were a poignant and sad symbol of American values today, it is the superior worth of a football team over an airline.
But maybe the Broncos purchase price makes economic sense? After all, the future revenue stream of an airline is subject to interruptions due to the likes of a pilot’s strike, not to mention a pandemic. Then also, Spirit Airlines’ reputation is terrible, while the Broncos don’t get trashed, their poor showing in the past few years notwithstanding.
Still, when all is said and done, a positive, future revenue stream of a merged Spirit-JetBlue Airlines is a far better bet than a projected Denver Broncos revenue stream spiking by 9.3 times — 9,300%! Even that would just cover the cost of the purchase, not represent a profit.
The $4.65 billion purchase tag for the Denver Broncos may yet make economic sense. It’s a ball team. It’s a toy. It’s distracting. It’s fun. Its value as a franchise will probably rise, no matter how slim the chances of its future revenue covering its purchase price — what an expression of the grossly distorted values in America today.
All this is even without getting into comparing an expenditure of $4.65 billion on a ball team as opposed to expenditures wisely allocated to combat poverty, drug addiction, crime, mental illness and homelessness, or to facilitate clean water, equal access to health care and quality education, etc. etc. Ball club vs. small airline. In America today, it’s not even a contest.
P. S. The recent purchase price for a Honus Wagner baseball card: $3 million.
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