Thursday, June 5, 2014

Pro Sports Owners Should Learn From Ballmer: It's Not About Profits

The proposed $2 billion sale of the L.A. Clippers is a reminder of the new reality in pro sports: that owning a franchise is a privilege, not a right.

With more billionaires than teams in America, it's clearer than ever that any owner upset about his/her team's profits should have little trouble selling said team (at a massive profit) to a new owner who will squawk a lot less. sums it up well:
Ballmer may simply view the Clippers as a way to park $2 billion. Surely there are better growth strategies available, but when you have $20 billion and you have to diversify anyway, why not take on a franchise where you can reasonably expect the franchise growth to outpace inflation, where you’re virtually guaranteed to not lose money? Plus he’ll have a nice toy to play with.
The post goes on to caution that the "new reality" may really just be a "bubble," but I have little doubt that franchise values - bolstered by not just competition among billionaires, but also soaring TV contracts - will continue to grow.  And that trend renders annual operating figures relatively moot.
Unfortunately, these new realities are unlikely to convince local governments from halting their open-checkbook policies on stadium subsidies.  Because a convincing owner who cries poor + fearmongering of possible relocation still adds up to taxpayer handouts in most cities.

1 comment:

  1. No party like a NFL party...