Revenue is a headline. SDE is the number
Owners often lead with revenue when discussing a potential sale. Buyers listen politely, then ask about SDE. Seller's discretionary earnings is the profitability metric that anchors most small-business valuations, and it is what your league is really worth a multiple of.
How to calculate SDE for a league
Start with net income. Add back interest, taxes, depreciation, and amortization. Add back the owner's salary and benefits, since a new owner will set their own compensation. Add back one-time expenses that will not recur under new ownership: a facility renovation, a legal settlement, a software migration.
Do not add back operating expenses that a normal owner would incur. A part-time bookkeeper stays. A referee coordinator stays. A software subscription that keeps the league running stays.
The result is a defensible earnings number that buyers can compare across leagues and against industry benchmarks.
Common mistakes
The most common error is inflating add-backs. Owners try to add back marketing, coaching stipends, or field rental, and buyers push back hard in diligence. Every add-back you cannot defend costs you credibility and, ultimately, price.
The second common error is understating revenue by treating registration fees as pass-through instead of revenue. If your league collects the fee, it is revenue. Treat it as such.
What a good SDE conversation looks like
A serious buyer will ask you to walk through your P&L line by line and defend each add-back. If you can do that with clean documentation, you have already earned back thirty to fifty basis points on the eventual multiple. If you cannot, you will spend the diligence period rebuilding your books under pressure.