Owning a Pro Sports Franchise

Remember when you used to dream about taking the field for your favorite professional sports team?  You spent hours in the backyard rehearsing how you'd come through in clutch situations, neglecting the homework you'd never need to do anyway once you signed your first big contract.  Unfortunately for most of us, the dream faded relatively quickly.  However, Forbes' recent ranking of the most lucrative Major League Baseball teams reminds everyone that the business of owning a professional franchise can pay serious dividends.  The National Football League (NFL), Major League Baseball (MLB), and the National Basketball Association (NBA) generated a combined $14.1 billion of revenue in 2005 and analysts expect that number to rise as all three leagues continue to expand their appeal around the globe.

As you can guess, the biggest obstacle to ownership comes from financing.  The New York Yankees topped Forbes' list with a valuation of $1.2 billion, a number that puts majority ownership beyond the means of most investors.  In addition, those looking to buy stock in a publicly held team might feel a bit disappointed by the lack of options.  While certain publicly held businesses such as the Chicago Tribune (TRB) own teams like MLB's Chicago Cubs, the teams don't make up enough of the corporation to have a real effect on the stock's value.  You'll have to traverse the frozen tundra of Lambeau Field in Wisconsin to find the only purely publicly held pro team in the NFL's Green Bay Packers.  Unfortunately, the stock doesn't pay dividends or appreciate in value, unless you count sentiment. 

Despite the obstacles to ownership, you can always begin with a smaller scale investment.  For example, a minor league baseball team costs anywhere from $5 million to $20 million.  If that still sounds a bit steep, consider that even a couple of twenty-something salesmen from upstate New York own an entry in the newly formed National Professional Basketball League.  It just goes to show that if you have enough conviction, some money to invest, and some partners willing to chip in, you can achieve your dream of owning and operating a pro sports franchise.

Of course, once you've put together the money to buy a team, you'll need all the energy, creativity, and keen business sense you can muster to make it work.  Marketing presents a major challenge for most minor league franchises, especially in less populated areas where the residents may not even know they have a home team to support.  Among other considerations, you'll also need to find a place for your team to play, a staff to help you run your daily operations, and the athletes who can make your club a winner on the field and at the gate.  Merchandising and distinctive branding can go a long way toward establishing the face of your franchise.

Regardless of all the issues you'll face, entering the business of professional sports presents a once-in-a-lifetime opportunity for entrepreneurs looking for a new challenge and a unique opportunity to mix business and pleasure.  If you'd like to learn more, read this article for the general steps you'll need to take before you invest. 

Disclosure: While I do own a mutual fund that may contain shares in companies mentioned in this article, any interest I may own is subject to the discretion of my mutual fund manager.  However, I am a longtime Red Sox fan who can live with seeing the Yankees atop a prominent list, as long as it's not the American League East standings in late September.

Disclaimer: Nothing in this trade log is meant to be specific financial advice or a recommendation to buy or sell. I do not give investment advice. Do your own research. Do not rely on anything in this weblog to make investment decisions. I do not log all my trades here. I only describe or mention those that I think might be interesting. Consult an investment professional familiar with your specific financial situation before buying or selling any stock or interest in any corporate entity.