When you are a big sports fan and have more money than you know what to do with, then perhaps owning your own sports team may be just what you need.
Many of the world’s ridiculously rich are following the trend of owning a sports team, but what are the perks and is it actually worth investing in or is it simply a hobby to keep boredom at bay?
Most people grow up emotionally involved in some sport and often enamoured with their chosen team. The decision to own a sports team, or even fractional interests in one, has many factors. For many it is often an emotion-led choice based on wanting to support the team they have followed their whole lives and would like to help financially or via certain expertise, and perhaps even pass down to their heirs. For budding billionaires it means local stardom and a big return whilst also helping out the local community.
Buying a team is not cheap however and there is great demand with less than 125 sports franchises in the four major sports – football, basketball, baseball and hockey. An NBA franchise such as the Memphis Grizzlies (owned by Robert Pera) could set you back about $1.3 billion whilst a football franchise could cost around $1.4 billion. Soccer is also on the rise with the expansion franchise fee sitting at around $150 million. If you can’t own an entire major league team then you could dabble in minor league or even buy fractional interests in a franchise – with fractional interests setting you back at least $1 million, if not more.
There are many benefits to owning a sports team. For one, the value of a sports franchise appreciates – with so few available, it sets billionaires bidding against billionaires as they are the only ones who have the financial firepower to buy and make the necessary follow-on investments. The thing to remember is that a sports franchise is a business like any other and must be well managed in order to make a profit. You’ll need to remember to meet all your expenses such as rent on your arena, payroll for everyone from your players to the hot dog stand guy, and to get in sponsorships to help your team budget. You’ll need to keep up a good image in order to keep your customers coming back; which often means a strong team that wins…a lot.
As with any business, every move you make must be thought out, but with owning a sports team, there’s a whole lot more limelight on the moves you make. More good news is that along with owning a sports team comes the fun of being the final decision maker in everything from which coaches and other high-profile staff to hire and fire, which players to have on your team, and so on. For team owners wanting to grow their businesses, the exposure a major league team can bring could also be a major boost. Major league teams such as the Los Angeles Lakers and New York Knicks can also comfortably make tens of millions in profit per year. And along with all this, no other business can boast brand loyalty like a sports team can!
The downside to owning a team is that most run at a loss or very small profit, with exception to the really famous major league teams. The current prolonged weakness in the economy has also hurt attendance of sporting events as the average family cannot afford many entertainment expenses and games have become a luxury for when there is extra income to spend. One must also remember that team expenses also extend to non-team assets such as developable real estate, stadium interests and leases, skating rinks, etc.
Sports star scandals can also really hurt your business, for example Tiger Woods’ affairs caused NBS’ golf ratings to take a significant hit. It can also affect ticket and apparel sales so it’s best to make sure your sports stars stay in-line and to quickly handle any situations should they arise.
Overall, the benefits far outweigh the few challenges, financially of course. The appreciation on sports teams often makes up for any losses during ownership and one can earn billions in profit if looking at owning a sports team long term. If your billionaire wallet is itching to own a sports team, why not look up a local sports advisory business broker and find out which teams are up for grabs. You could soon be living your very own sports team dream!
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