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    China’s wealthy are increasingly looking overseas for business investment opportunities

    China’s wealthy want to pursue business opportunities abroad, rather than just investment returns, according to asset managers and consultants.
    This year, there’s been a “very significant” trend of requests from Chinese family offices that want to acquire smaller businesses in Japan, said Ryota Kadogaki, co-founder and global CEO of Monolith, a Japan-based consulting firm for family offices.
    “Most of our clients are China-rooted entrepreneurs who are looking to further globalize,” Grant Pan, CFO of China-based wealth management firm Noah Holdings, told CNBC.

    Instead of high-net-worth individuals, C-suite executives in China are increasingly using business jets, said Paul Desgrosseilliers, general manager at ExecuJet Haite General Aviation Services. The company opened a new service center at Beijing Daxing International Airport on Aug. 27, 2024.
    ExecuJet Haite

    BEIJING — China’s wealthy are increasingly looking for ways to move capital outside the mainland to pursue business opportunities, rather than just chasing investment returns, according to asset managers and consultants.
    This year, there’s been a “very significant” trend of requests from Chinese family offices that want to acquire smaller businesses in Japan, said Ryota Kadogaki, co-founder and global CEO of Monolith, a Japan-based consulting firm for family offices.

    “I’m studying Chinese as well, and I’m thinking to hire Chinese speakers in my company right now,” he said, noting that slower growth in China and a weaker Japanese yen are supporting the increased interest. Even with recent strengthening to around 20 yen versus the Chinese yuan, that’s still weaker than the 15 level seen in 2020.
    Investors based in mainland China increased their non-financial direct investments overseas by 16.2% to the equivalent of $83.55 billion during the January to July period, according to the Ministry of Commerce. It said the investments covered more than 6,100 businesses in 152 countries and regions.
    “Most of our clients are China-rooted entrepreneurs who are looking to further globalize,” Grant Pan, CFO of China-based wealth management firm Noah Holdings, told CNBC. “Obviously they are at least keeping their eyes open for opportunities for their businesses all over the world. Obviously there’s slowdown pressure in terms of domestic markets for many industries.”

    “Many of our clients appear to be busier than before,” he said. “As they are exploring new markets, they travel more frequently, which more or less gives them a better perspective of global allocation.”
    Noah Holdings said the number of its overseas registered clients rose by 23% from a year ago to nearly 16,800 as of the end of June. The company’s active overseas clients rose by nearly 63% year on year to 3,244.

    Overseas assets under management rose nearly 15% to $5.4 billion from a year earlier, while mainland China assets under management fell over 6% to $15.8 billion, according to Noah’s quarterly earnings report.
    Mainland China keeps a tight control on capital with an official limit of $50,000 in overseas foreign exchange a year. That’s meant affluent Chinese have long looked for alternative ways to grow wealth outside the country.
    Kadogaki noted that buying foreign companies is a way for Chinese investors to move assets abroad. He also shared examples of how a fund investing in a tech company in China might now look to acquire a retail store in Japan to expand potential revenue.
    In June 2023, Kadogaki said his company started working with Canopy, a Singapore-based wealth management software company working with many China-related funds, to help them localize in Japan. “We can be a gateway for their clients to invest in Japan,” he said.
    Right now, Canopy says its system supports English, simplified and traditional Chinese and German. The company claims it works with more than 300 custodians with more than $160 billion in assets under reporting.

    A ‘rational’ shift after the post-Covid rush

    “Typically we deal with the professionals that help manage the money for the wealth owners,” said Mu Chen, executive director at Canopy. “What we are hearing from them is that the fastest growth in terms of interest from Chinese clients [occurred] in the post-Covid [period to] early last year.”
    “In 2022, 2023, maybe it was more a reactionary behavior to think about going overseas,” he said. “I think now it becomes more rational and it’s more about these families, and these families planning not just their assets globally, but planning their assets, their business, their family globally using Hong Kong or Singapore as a base to look more outward.”
    This interest in moving their wealth abroad to tap business opportunities comes as many Chinese companies have accelerated their global expansion in the last few years. That’s largely due to slower domestic growth, following years of rapid expansion.
    That contrasts with how an earlier generation of Chinese entrepreneurs primarily tapped global markets by simply exporting China-made goods, or acquiring overseas real estate.
    Noah Holdings’ Pan pointed out that many of the company’s affluent clients have set up offices and alternative residences in Hong Kong, Singapore or Japan as a way to explore global business opportunities while keeping proximity to China operations.
    “Many entrepreneurs don’t have a very clear distinction between enterprise and family,” Pan said. “They get their wealth from operating such business and sometimes they inject capital back [to the family.]”
    Affluent Chinese residents’ attempts to increasingly venture into global markets can also be witnessed in the demand for private, international travel.
    “Whether it’s Southeast Asia, the Middle East, Africa, there’s been a lot of growth in these areas for Chinese conglomerates, so I think that the executives from China have a need to utilize [private] long-range aircraft … We see a lot of flights going there,” said Paul Desgrosseilliers, general manager at ExecuJet Haite General Aviation Services, which operates maintenance centers for private planes.
    As part of a multi-year plan, ExecuJet Haite opened on Aug. 27 a maintenance, repair and operations center for private jets at Beijing Daxing International Airport. The center, which claims to be the largest for business aviation in Asia Pacific, can access a designated channel at the airport for international immigration processing and customs.

    Tackling slower growth

    Desgrosseilliers said international business jet flights across ExecuJet Haite’s other facilities at Beijing Capital Airport and in Tianjin have recovered, but not yet to pre-pandemic levels.
    Major U.S. and Chinese corporations have also noted a slowdown in Chinese consumer demand in their second-quarter earnings.
    The trend of affluent Chinese looking to expand their businesses globally is still in relatively early stages, and not every family will choose to go abroad, Canopy’s Chen said. He cited how a family of a seasoning products business in China, whose founder is getting older, didn’t feel the need to globalize their business or wealth planning.
    “As the newer generations’ founders, entrepreneurs think more globally, they also think [about] their business more globally.” More

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    Red Lobster cleared to exit Chapter 11 bankruptcy protection

    Red Lobster is one step closer to exiting Chapter 11 bankruptcy protection after a court approved its restructuring plan.
    A group of investors under the name RL Investor Holdings will acquire Red Lobster by the end of the month.
    At least nine other restaurant chains have filed for bankruptcy protection this year.

    The exterior of a Red Lobster restaurant in Austin, Texas, on May 20, 2024.
    Brandon Bell | Getty Images

    A bankruptcy court approved Red Lobster’s plan to exit Chapter 11, putting the seafood chain one step closer to exiting bankruptcy.
    The company, known for its seafood offerings and cheddar biscuits, filed for bankruptcy protection in May. Red Lobster had struggled with increased competition, expensive leases, last year’s disastrous shrimp promotion and a broader pullback in consumer spending.

    As part of the restructuring plan, a group of investors under the name RL Investor Holdings will acquire Red Lobster by the end of the month. Once the acquisition closes, former P.F. Chang’s CEO Damola Adamolekun will step in to lead Red Lobster. Current CEO Jonathan Tibus, who led the company through bankruptcy, will leave Red Lobster.
    “This is a great day for Red Lobster,” Adamolekun said in a statement. “With our new backers, we have a comprehensive and long-term investment plan — including a commitment of more than $60 million in new funding — that will help to reinvigorate the iconic brand while keeping the best of its history.”
    RL Investor Holdings includes TCW Private Credit, Blue Torch and funds managed by affiliates of Fortress Investment Group. Red Lobster will operate as an independent company.
    After slimming down its restaurant portfolio, the chain currently operates 544 restaurants across the U.S. and Canada.
    At least nine other restaurant chains have filed for bankruptcy protection this year. High interest rates and a pullback in consumer spending have weighed on eateries, particularly if they were already struggling to bounce back from the Covid-19 pandemic.

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    Family offices are about to surpass hedge funds, with $5.4 trillion in assets by 2030

    The number of single-family offices — the in-house investment and service firms of families typically worth $100 million or more — is expected to rise from 8,000 to 10,720 by 2030, according to Deloitte Private.
    They’re expected to top $5.4 trillion in assets by 2030, projecting them to have more assets than hedge funds in the coming years.
    Family offices are seen as offering more privacy, more customization and more tailored programs for the next generation of the family.

    Colleagues working together in the office.
    Aja Koska | E+ | Getty Images

    A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
    Family offices are expected to add more than $2 trillion in assets by 2030, as an increase in wealth concentration and a revolution in wealth management drive rapid growth in new family offices.

    The number of single-family offices — the in-house investment and service firms of families typically worth $100 million or more — is expected to rise from 8,000 to 10,720 by 2030, according to a report from Deloitte Private. Their assets are expected to grow even faster, topping $5.4 trillion by 2030, up from $3.1 trillion today and more than doubling since 2019.

    In total, the wealth of families with family offices is expected to top $9.5 trillion in 2030, according to the report — more than doubling over the decade.
    “The growth has been explosive,” said Rebecca Gooch, global head of insights for Deloitte Private. “It’s really the past decade that has seen an acceleration in growth in family offices.”
    The rise of family offices is remaking the wealth management industry and creating a powerful new force in the financial landscape. Projected to have more assets than hedge funds in the coming years, family offices have become the new stars of fundraising, with venture capital firms, private equity interests and private companies all competing to capture a slice of their rising wealth.
    The growth is being driven by two broader economic forces. Increasingly, wealth is growing fastest at the top of the pyramid, as technology and globalization create winner-take-all markets and outsized rewards for tech entrepreneurs. The number of Americans worth $30 million or more grew 7.5% in 2023, to 90,700, while their fortunes surged to $7.4 trillion, according to CapGemini.

    The population of centimillionaires — those worth $100 million or more — has more than doubled over the past 20 years to over 28,000, according to Henley & Partners and New World Wealth. There are now an estimated 2,700 billionaires in the world, according to Forbes, more than 2.5 times the number in 2010.
    At the same time, the ultra-wealthy are changing the way they manage their investments and financial lives. Rather than handing over their fortunes to a single private bank or wealth management firm, today’s mega-wealthy are opting to create single-family offices to better represent their interests and long-term goals. Family offices are seen as offering more privacy, more customization and more tailored programs for the next generation of the family.
    “They want a team that’s entirely dedicated to them, 24 hours a day,” Gooch said. “Not only with investing, but in all the different areas of their life.”
    After the financial crisis, wealthy families also want advisors that represent the family’s best interests, rather than private bank or wealth management advisors incentivized by the need to sell product.
    “There are some organizations that don’t have products to pitch, but a lot of them do,” said Eric Johnson, Deloitte’s private wealth leader and family office tax leader. “And, lo and behold, if you engage them, what you’re going to have to buy is kind of what they’re selling, which might not be the best for the family.” 
    More than two-thirds of family offices have been created since 2000, according to Deloitte. The largest number (41%) were founded by the original wealth creators, while 30% serve the second generation (inheritors) and 19% serve the third generation.
    North America is leading the family office revolution. Family office wealth in North America is expected to grow by 258% between 2019 and 2030, compared with 208% in the Asia-Pacific region. North America’s 3,180 single-family offices are expected to balloon to 4,190 by 2030, accounting for about 40% of the world’s total. Asia-Pacific has about 2,290 family offices today, expected to grow to 3,200 by 2030.
    The total wealth held by families with family offices in North America has more than doubled since 2019, to $2.4 trillion. It’s expected to reach $4 trillion by 2030, according to Deloitte.

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    That $5 trillion pool of capital globally has touched off a feeding frenzy on Wall Street to help family offices manage their money. From Goldman Sachs and Morgan Stanley to UBS, J.P. Morgan Private Bank, Citi Private Bank, and myriad trust companies and multifamily offices, traditional wealth-management firms are poaching family office specialists and launching new family office teams to better target the growth.
    Accounting firms, tax attorneys, consulting firms and tech companies are also waking up to the power of family offices, which can now more easily outsource parts of their business to keep costs lower.
    “There is a whole new arena of companies that benefit from this ecosystem,” Gooch said.
    As they expand in both size and number, family offices are also becoming more institutionalized. Rather than two- or three-person shops focused on basic portfolios and arranging family travel, today’s family offices are more like boutique investment firms. The average family office has a staff of 15 people managing $2 billion, according to Deloitte.
    Family offices are also changing how they invest. Instead of the old-school 60-40 stock and bond portfolios, family offices are shifting their money to alternative assets, including private equity, venture capital, real estate and private credit.
    Family offices now have 46% of their total portfolio in alternative investments, according to the J.P. Morgan Private Bank Global Family Office Report. The largest amount is in private equity, at 19%. Aside from investing in private equity funds, more family offices are doing direct deals, where they invest directly in a private company.
    A survey by BNY Wealth found that 62% of family offices made at least six direct investments last year, and 71% plan to make the same number of direct deals this year.
    Private equity giants like Blackstone, KKR and Carlyle are building out their private wealth teams to better target family offices. Deal-makers for private companies are also discovering family offices, which can buy equity stakes or entire companies. Since family offices have long time horizons, preferring to invest for decades or even generations, they’re seen as more “patient capital” compared with private equity firms or venture capital.
    “Family offices can be very solid, strong partners to invest with,” Gooch said. “I think a lot of the private companies are very grateful for their long-term patient capital and their dedication to this space.”
    To support their growing assets and responsibilities, family offices are on a hiring spree. Fully 40% of family offices plan to hire more staff this year, according to Deloitte. More than a third (36%) say they plan to increase the number of services they provide to the family, or increase the number of family members served. More than a third (34%) are also increasing their reliance on outsourcing, Deloitte notes.
    Deloitte said the biggest trends for family offices in the coming years will be the continued move toward “institutionalization” — with more professional management, governance and technology. More than a quarter of family offices now have multiple “branches” to serve different parts of the family, often in other countries.
    And with the great wealth transfer expected to shift trillions of dollars to spouses and the next generation, more women and inheritors will start running family offices in the coming years. The average age of family office principals in the Deloitte survey was 68 years old, and 4 in 10 family offices will go through a succession process in the next decade.
    While women represent 10% of the wealth holders for those with $100 million or more, they control 15% of the world’s family offices, according to the survey.
    “On a like-for-like basis with men, women are somewhat more likely to become the principal of the family office,” Gooch said. “Family offices can really focus on key stages of life, like retirement or legacy planning. And making sure the next generation is prepared.”

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    JPMorgan top economist says the Fed should cut rates by a half point this month

    JPMorgan’s top economist Michael Feroli believes the Federal Reserve should cut interest rates by a half point this month.
    Traders are pricing in a 39% chance that the Fed’s target range for the federal funds rate will be lowered by a half percentage point, per the CME FedWatch Tool.
    Feroli’s remarks come as August saw the weakest private payrolls growth in more than three-and-a-half years.

    Michael Feroli, chief U.S. economist of JPMorgan Securities, listens during a Bloomberg Television interview in New York on March 6, 2018.
    Christopher Goodney | Bloomberg | Getty Images

    The Federal Reserve should cut interest rates by 50 basis points at its September meeting, according to JPMorgan’s Michael Feroli.
    “We think there’s a good case that they should get back to neutral as soon as possible,” the firm’s chief U.S. economist told CNBC’s “Squawk on the Street” on Thursday, adding that the high point of the central bank’s neutral policy setting is around 4%, or 150 basis points below where it is currently. “We think there’s a good case for hurrying up in their pace of rate cuts.”

    According to the CME FedWatch Tool, traders are pricing in a 39% chance that the Fed’s target range for the federal funds rate will be lowered by a half percentage point to 4.75% to 5% from the current 5.25% to 5.50%. A quarter-percentage-point reduction to a range of 5% to 5.25% shows odds of about 61%.
    “If you wait until inflation is already back to 2%, you’ve probably waited too long,” Feroli also said. “While inflation is still a little above target, unemployment is probably getting a little above what they think is consistent with full employment. Right now, you have risks to both employment and inflation, and you can always reverse course if it turns out that one of those risks is developing.”
    His comments come as August marked the weakest month for private payrolls growth since January 2021. This follows the unemployment rate inching higher to 4.3% in July, triggering a recession indicator known as the Sahm Rule.
    Even still, Feroli said he does not believe the economy is “unraveling.”
    “If the economy were collapsing, I think you’d have an argument for going more than 50 at the next FOMC meeting,” the economist continued.
    The Fed will make its decision about where rates are headed from here on Sept. 17-18.

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    Ford truck, hybrid models lead to 13% increase in August sales

    Ford Motor’s U.S. vehicle sales jumped 13.4% last month, led by increases in the company’s F-Series trucks and hybrid models.
    The automaker saw an increase in all-electric vehicle sales, but traditional cars and trucks with internal combustion engines still represented 86% of Ford’s sales in August.

    A Ford Raptor pickup truck is displayed for sale at a Ford dealership on August 21, 2024 in Glendale, California. 
    Mario Tama | Getty Images

    DETROIT — Ford Motor’s U.S. vehicle sales jumped 13.4% last month, led by increases in the company’s F-Series trucks and hybrid models.
    The Detroit automaker reported sales Thursday of nearly 183,000 vehicles in August, including a 12.3% increase in trucks and a roughly 50% jump in hybrid vehicles compared with a year earlier. Its all-electric vehicle sales jumped 29% during that time, including a notable rise in its F-150 Lightning pickup.

    Despite the increase in electrified vehicles, traditional cars and trucks with internal combustion engines still represented 86% of Ford’s sales last month.
    Ford’s August sales outpaced overall industry estimates of a roughly 6% year-over-year increase from a year earlier, according to Barclays.

    Despite steep prices and high interest rates, U.S. auto sales have remained stable in 2024, but they’re not as high as some expected to begin the year. Barclays on Thursday lowered its 2024 sales forecast from 16 million vehicles to 15.8 million, citing a 15.7 million sales pace through August.
    “While potential interest rate cuts may help affordability, so long as [manufacturers] aim to keep prices elevated, it will likely be difficult for [seasonally adjusted annual rate] to surpass the ~16.0mn level,” Barclay’s Dan Levy wrote Thursday in an investor note.
    Ford’s U.S. sales through August were up 4.3% to 1.4 million units.

    Ford’s August sales weren’t the only double-digit increases. While not all automakers report monthly sales, the Hyundai brand reported a 22% rise in sales last month compared with August 2023.

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    How high earners can funnel money to a Roth IRA, the ‘gold standard’ of retirement accounts

    Investors with high incomes may not be able to contribute to a Roth or make deductible contributions to a traditional individual retirement account.
    However, a strategy called the “backdoor Roth IRA” lets high earners access Roth accounts.
    Investors would make a nondeductible contribution to a traditional IRA, and then convert those funds to a Roth account.

    Thomas Barwick

    IRA access, tax breaks can phase out for high earners

    IRAs have a $7,000 annual contribution limit for 2024. Investors age 50 or older can save an extra $1,000, or $8,000 total this year.
    Investors who save in a pretax IRA typically get a tax deduction on their contributions. However, they generally pay income tax later on earnings and withdrawals. Roth contributions don’t get the same upfront tax break: Investors fund Roth IRAs with after-tax money, but generally don’t pay income taxes on earnings or withdrawals in retirement.

    Many high earners can’t make the most of these tax-advantaged accounts, though.  
    For example, married couples who file a joint tax return can’t contribute to a Roth IRA in 2024 if their modified adjusted gross income is $240,000 or more. The income threshold for single filers is $161,000. (Eligibility starts to phase out even before these dollar thresholds, reducing how much investors can contribute.)
    Likewise, there are income limits on deductibility for pretax (also known as “traditional”) IRAs, for those who also have access to a workplace retirement plan like a 401(k).
    For example, single filers with income of $87,000 or more in 2024 don’t get a tax deduction for contributions to a traditional IRA, if they are covered by a retirement plan at work.
    The same holds true for married couples filing jointly. For example, if your spouse participates in a 401(k) plan at work, you don’t get a deduction on IRA contributions if your joint income is $240,000 or more. If you are the one who participates in workplace 401(k), the limit is $143,000. (Again, you may only get a partial deduction below these dollar thresholds due to income phaseouts.)

    The ‘only reason’ to save in a nondeductible IRA

    Lordhenrivoton | E+ | Getty Images

    High earners can contribute to a so-called nondeductible IRA, however.
    This is a traditional IRA, but investors don’t get a tax deduction for their contributions; they fund the accounts with after-tax money. Investors owe income taxes on growth later, upon withdrawal.
    The ability to use the backdoor Roth IRA is a major benefit of these accounts, tax experts said.
    It only applies to investors who make too much money to contribute directly to a Roth IRA or make a tax-deductible contribution to a traditional IRA, Slott said.
    Here’s the basic strategy: A high-income investor would make a nondeductible contribution to their traditional IRA and then quickly convert the funds to their Roth IRA.

    “The only reason you’d do [a nondeductible IRA] is if the intention was to do a backdoor Roth,” Slott said.
    After making the nondeductible contribution, Slott recommends waiting about a month before converting the funds to a Roth IRA. This ensures your IRA statement reflects the nondeductible contribution, in case the IRS should ever require proof, he said.
    Some investors may also be able to take advantage of a similar strategy in their 401(k) plan, the so-called mega backdoor Roth conversion. This entails shifting after-tax 401(k) contributions to a Roth account. However, the strategy isn’t available to everyone.
    “All high wage earners should consider looking at both a backdoor Roth IRA and a mega backdoor Roth IRA if they can’t set up a Roth IRA,” said Ted Jenkin, a certified financial planner and founder of oXYGen Financial, based in Atlanta. He’s also a member of the CNBC Financial Advisor Council.

    When a nondeductible IRA doesn’t make sense

    A nondeductible IRA likely doesn’t make sense for investors who don’t intend to utilize the backdoor Roth strategy, according to financial advisors. In such cases, the investor would just let contributions stay in the nondeductible IRA.
    For one, nondeductible IRA contributions carry potentially burdensome administrative and recordkeeping requirements, Slott said.
    “It’s a life sentence,” he said.
    Taxpayers have to file a Form 8606 to the IRS every year to keep track of their after-tax contributions to a nondeductible IRA, according to Arnold & Mote Wealth Management, based in Hiawatha, Iowa. Withdrawals “add more complexity” to that administrative lift, it added.

    Why taxable brokerage accounts ‘are probably better’

    Momo Productions | Digitalvision | Getty Images

    Without a backdoor Roth in play, most investors would be better suited by saving in a taxable brokerage account rather than a nondeductible IRA, advisors said. That’s because investors using the former will likely end up paying less in tax on their profits over the long term.
    Taxable brokerage accounts “are probably better in most aspects,” Slott said.
    Investors who hold assets like stocks in a taxable brokerage account for more than a year generally pay a favorable rate on their profits relative to other income taxes.
    These “long term” capital gains tax rates — which only apply in the year investors sell their asset — are as high as 20% at the federal level. (High earners may also owe a 3.8% “Medicare surtax” on profits.)
    By comparison, the top marginal income tax rate is 37%. Investors in nondeductible IRAs are subject to these generally higher rates on earnings upon withdrawal.

    While taxable brokerage account investors pay taxes each year on dividend income, such taxes are generally not enough to negate the relative tax benefits of such accounts, advisors said.
    “The tax deferral of non-deductible IRAs can be an advantage for some,” according to Arnold & Mote Wealth Management. “However, we find that this is quite rare.”
    Additionally, investors in taxable brokerage accounts can generally access their funds anytime without penalty, whereas IRAs generally carry tax penalties when earnings are tapped before age 59½. (There are some IRA exceptions, however.)
    Taxable accounts have no required minimum distributions while the account holder is alive, unlike traditional and nondeductible IRAs.
    “A taxable account provides the flexibility to add money and take money out with few limits, penalties, or restrictions,” Judith Ward, a certified financial planner at T. Rowe Price, an asset manager, wrote recently. More

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    Here’s where American Airlines is adding flights to Europe in summer 2025

    American is boosting service to Europe from its hubs in Miami, Charlotte, North Carolina, and Philadelphia.
    New destinations include nonstop flights to Greece, Scotland, Spain and Italy.

    Boeing 787-9 Dreamliner, from American Airlines company, taking off from Barcelona airport, in Barcelona on 24th February 2023. 
    JanValls | Nurphoto | Getty Images

    As social media feeds make their seasonal shift from the Parthenon to pumpkin patches, airlines are busy preparing for the 2025 Europe travel season, a bet that strong demand for international travel will continue next summer.
    American Airlines on Thursday unveiled new routes to Europe for spring and summer next year. The carrier rolled out nonstop service from Chicago to Madrid starting March 30; Philadelphia to Milan starting May 23; Philadelphia to Edinburgh, Scotland, beginning May 23, back for the first time since 2019; Charlotte, North Carolina, to Athens, Greece, beginning June 5; and Miami to Rome from July 5.

    Rivals United Airlines and Delta Air Lines are expected to release their 2025 travel plans in the coming weeks.
    American said its trans-Atlantic capacity next summer will be up low-to-mid-single digits over this year, with executives confident that consumers will continue to prioritize travel.
    “In ’23 when people saw this demand to Italy and Greece, some people speculated that it was a one-year thing. But then this year, that strength just kept going and our flights are full and the yields are strong,” said Brian Znotins, American’s senior vice president of network planning. “More capacity is warranted to address the demand.”

    American’s data shows that travelers, including on other airlines, are often connecting in Europe to get to Athens, in particular, Znotins said. Next year, American said it will have four daily nonstops from the U.S. to Athens from “more U.S. airports than any other,” and that more travelers will be able to connect through American’s hubs like Charlotte.
    The carrier is also bringing back other Europe flights from its Philadelphia hub to Naples, Italy; Nice, France; and Copenhagen, Denmark, as well as extending winter seasonal service between Miami and Paris into the summer season.

    Boeing’s delivery delays of 787 Dreamliners over the past several years prompted American and other carriers to rethink some of their flying and cut certain international flights that the long-haul airplanes serve. American is also in the middle of reconfiguring some of its older Boeing 777s to build a bigger business class cabin.
    Znotins said he and his team drew up next year’s map with both things in mind.
    “There’s some level of uncertainty obviously in the aircraft delivery world and there’s a level of uncertainty with our reconfigurations,” Znotins said. “We’re confident we’ll be able to fly these routes as we’ve published them, but in an uncertain world it’s always nice to have a backstop” like other hub cities serving Athens, for example, should a passenger need to be rerouted.

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    Rising NFL valuations mean massive returns for owners. Here’s how good the investment is

    Tune in to CNBC all day for coverage of the Official 2024 NFL Team Valuations

    The average value of the NFL’s 32 franchises is $6.5 billion, according to CNBC’s Official 2024 NFL Team Valuations.
    Pro football teams have been a lucrative asset for owners in the most popular U.S. sports league: The returns they have seen on their initial investments dwarf the gains of traditional stocks over matching time periods.
    The escalation in football team values is largely the result of the league’s massive and growing media deals as well as booming stadium businesses.

    Ryan Flournoy, #18 of the Dallas Cowboys, catches a touchdown pass as Matt Hankins, #23 of the Los Angeles Chargers, defends during the first half of a preseason game at AT&T Stadium in Arlington, Texas, on Aug. 24, 2024.
    Ron Jenkins | Getty Images Sport | Getty Images

    A National Football League team today is a $6.5 billion business.
    That is the average value of the NFL’s 32 franchises, according to CNBC’s Official 2024 NFL Team Valuations. Pro football teams have been a lucrative asset for owners in the most popular U.S. sports league: The returns they have seen on their initial investments dwarf the gains of traditional stocks over matching time periods.

    Take, for example, the Houston Texans, No. 11 on CNBC’s 2024 value rankings. Back in 1999, the last time the NFL expanded, the late Robert McNair agreed to buy the rights to the franchise at a purchase price of $600 million, which takes into account payment structure and the value of a deal over time. The Texans are now worth $6.35 billion, more than 10 times McNair’s fee and three times more than the gains of the S&P 500 since that year.
    That’s not bad for a team that has a record of 152-202-1 over its 22 seasons and has never made it to the Super Bowl.
    And the Texans aren’t alone.
    Across the past 10 NFL teams to be sold, seven of the 10 outperform the S&P 500 on a percentage-gained basis in the period since the sale. The Washington Commanders and the Denver Broncos — No. 13 and No. 14 on CNBC’s 2024 team valuations list, respectively — underperform broader market gains and, notably, were sold within the past two years. The Miami Dolphins, No. 8 on CNBC’s list, also lag the S&P, but were last sold in 2009 when the stock market was emerging from a bottom after getting pummeled during the 2007-08 financial crisis.

    Rising valuations

    The escalation in football team values is largely the result of the league’s massive and growing media deals.

    The NFL’s current television agreements with Comcast, Disney, Paramount and Fox, which began last season, are worth an average of $9.2 billion a year, 85% more than the previous deals.
    Add in the streaming deals with YouTube for NFL Sunday Ticket and with Amazon Prime for Thursday Night Football, and the NFL is guaranteed an average of $12.4 billion a year through 2032 — almost double the $6.48 billion a year it collected during its previous media rights cycle.

    More coverage of the 2024 Official NFL Team Valuations

    On top of those bulk agreements, the league has been boosting its media revenue by selling additional streaming games.
    Last season, the NFL sold exclusive streaming rights to a Wild Card playoff game to Comcast’s Peacock streaming service for $110 million, according to a person familiar with the deal.
    The league sold three exclusive streaming packages for this season: two Christmas Day games on Netflix for a total of $150 million; a Wild Card game on Amazon Prime for $120 million; and an international regular-season game on Peacock for $80 million, according to the person familiar with the agreements. The league should get about $200 million for its commercial Sunday Ticket rights, which gets an array of NFL games into bars and restaurants, according to the person familiar with the matter.
    All of those agreements combined bring total media rights fees to $357 million per team, up from $325 million in 2023.
    CNBC sources requested anonymity to discuss the specifics of deals that aren’t publicly available.

    A detail view of a broadcast camera is seen with the NFL crest and ESPN Monday Night Football logo on it during a game between the Chicago Bears and the Minnesota Vikings at Soldier Field in Chicago on Dec. 20, 2021.
    Icon Sportswire | Icon Sportswire | Getty Images

    A rising tide lifts all boats in the NFL. The 32 teams share the national media deal revenue evenly, along with money from leaguewide sponsorship and licensing deals and 34% of gate receipts. In 2023, $13.68 billion, or 67%, of the NFL’s $20.47 billion in revenue was shared equally.
    When such large revenue sharing is combined with a salary cap that limits player spending to about 49% of revenue, teams in small markets such as Green Bay; Wisconsin; and Buffalo, New York, can compete with big-market teams in New York and Los Angeles. The small-market Kansas City Chiefs, No. 18 on CNBC’s 2024 valuation rankings, have won the past two Super Bowls and three of the past five.
    But there is still a wide chasm in team values, largely due to stadiums. Teams do not share revenue from luxury suites, on-site restaurants, merchandise stores, sponsorships or non-NFL events at their stadiums.
    Last year, that made a bigger difference than usual.

    Taylor Swift performs during her The Eras Tour at SoFi Stadium in Inglewood, California, on Aug. 7, 2023.
    Allen J. Schaben | Los Angeles Times | Getty Images

    Pop star Taylor Swift performed at several NFL stadiums last year as part of her blockbuster Eras Tour, including Los Angeles’ SoFi Stadium, Tampa Bay’s Raymond James Stadium, New England’s Gillette Stadium and Philadelphia’s Lincoln Financial Field. One Eras Tour stop netted $4 million in revenue per show for the hosting stadium, according to a person familiar with the matter, who spoke on the condition of anonymity to discuss confidential information.
    The Dolphins’ Hard Rock Stadium, also an Eras Tour stop, raked in more than $30 million last year from college football games, soccer matches, concerts, festivals and tennis matches — and it could double that this year, according to a person familiar with the matter.

    Return on investment

    The revenue sharing and salary-cap agreements also make the league very profitable.
    During the 2023 season, the NFL’s 32 teams generated average revenue of $640 million and average operating income — earnings before interest, taxes, depreciation and amortization — of $127 million. The typical NFL team has an EBITDA margin of 19%.
    Financial success for the NFL has meant higher premiums for team sales.
    Two years ago, Walmart heir Rob Walton bought the Denver Broncos for $4.65 billion, or 8.8-times the team’s revenue. But these days, a prospective owner would be hard-pressed to pay less than 10-times revenue for a team. The average value-to-revenue multiple in CNBC’s 2024 ranking of all 32 teams is 10.2.
    Last year, private equity billionaire Josh Harris purchased the Washington Commanders for $6.05 billion, or 11-times revenue. Earlier this year, hedge fund manager Ken Griffin made an unsolicited $6.05 billion offer for the Tampa Bay Buccaneers, which valued the team at 9.8-times revenue, according to a person familiar with the matter. That offer was turned down by the Glazer family, which owns the franchise.
    Griffin also earlier this year offered $7.5 billion for the Miami Dolphins, or 11-times revenue, according to various media reports.
    When teams do change hands, they have proven to be a smart investment.
    The league’s most valuable team, the Dallas Cowboys, is worth $11 billion — 73 times what owner Jerry Jones paid for the team in 1989. The S&P 500 is up just 18-fold since Jones bought the Cowboys.

    Owner Jerry Jones of the Dallas Cowboys attends training camp at River Ridge Complex in Oxnard, California, on July 24, 2021.
    Jayne Kamin-oncea | Getty Images

    The Cowboys posted by far the most revenue of any team in the league last year, at $1.22 billion, and the most operating income, at $550 million, in large part because of sponsorship revenue. Dallas is approaching an NFL-leading $250 million in revenue from sponsors, according to CNBC sources.
    The Los Angeles Rams, No. 2 on CNBC’s 2024 valuations list, were also No. 2 in revenue, with $825 million. The Rams were also second in the league in sponsorship revenue and brought in some serious money by hosting more than 25 nonfootball events at SoFi Stadium, including six sold-out nights of Swift’s Eras Tour and three of Beyoncé’s Renaissance Tour, as well as concerts for Ed Sheeran, Metallica and Pink.
    The Rams, who were in St. Louis when sports and entertainment mogul Stanley Kroenke bought the team for $750 million in 2010, are now worth $8 billion. Even factoring in the $550 million relocation fee Kroenke had to pay the league to move the team to Los Angeles, as well as a $571 million settlement fee related to legal challenges for relocating, his investment is up more than four-fold.
    The rise in NFL team values explains why private equity firms are chomping at the bit to invest in the league.
    For several years now, Major League Baseball, the National Basketball Association, the National Hockey League and Major League Soccer have all permitted institutional investors to buy limited partner stakes in teams. European soccer leagues such as the English Premier League have also.
    The NFL followed suit just last week. The league owners voted to allow a select group of private equity firms — Ares Management, Sixth Street Partners, Arctos Partners and an investing consortium made up of Dynasty Equity, Blackstone, Carlyle Group, CVC Capital Partners and Ludis — to take up to 10% stakes in NFL franchises. The firms committed $12 billion in capital over time, people familiar with the matter told CNBC.
    Allowing private equity firms to invest in the league should make it easier to finance the purchase of a team.
    Even the lowest-valued team on CNBC’s list, the Cincinnati Bengals, is worth $5.25 billion.
    Factoring in the league’s maximum allowable debt of $1.4 billion, that leaves an equity burden of $3.8 billion. Assuming a general partner would hold the minimum required 30%, limited partners need to put in a combined $2.7 billion to get in the game.
    Disclosure: Peacock is the streaming service of NBCUniversal, the parent company of CNBC.

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