You are thinking about buying a pro sports team. Here are 10 things successful owners think you should know
Marc Lasry, Wes Edens and Wes Edens purchased the Milwaukee Bucks for $550 million in 2014. This team had the worst record in NBA basketball, played in one of its smallest markets, was in debt, and the price was among the highest for a professional basketball player.
Lasry and Edens have a good knowledge of distressed assets. They bought billions worth of distressed assets, including bank loans, companies and bonds. But $550 Million for the Bucks? Since 1971, there had been no league championship for the Bucks. It was 15-67 in 2014's season.
Herb Kohl, an ex-senator from the US, was the original owner and wanted $550m. He also wanted the team in Milwaukee. Lasry states that no negotiation could change his mind. Kohl could stay true to his guns as the market for sports teams, aside from art, is unique. After a pandemic that has ravaged arenas and stadiums all over the globe, these assets are scarce, hard to compare and highly sought-after.
Steve Greenberg is the managing director of Allen & Co. a boutique investment bank. He says, "My phone has rung constantly over this last year from people interested in purchasing a team." "And we've received very, very few phone calls about selling teams." It has been 10 years since a huge amount of wealth was created, which is great for the prices. The New York Mets is a good example. The Wilpon-Katz families placed the team on the market and hired Greenberg (considered to be the most successful sports banker of all time) shortly before Covid-19 was born. They kept the team in the marketplace, even as the epidemic became widespread, and sold the team to Steve Cohen, a hedge fund mogul, for $2.42billion. This was a North American record for pro-sports.
It was impossible to buy the dip because there wasn’t one. How can you find a professional sporting franchise in a hot market? Robb Report reached out to 10 top business people and came up a list of their recommendations. We also inquired about the first few year of ownership. That is when the real work happens. It is often surprising to new owners how different it is to run a franchise than a tool-and–die business. It's a thrilling experience to see 20,000 people cheering you on, but all decisions you make are public, Lasry says. While no one knows when Satya Nadella, Microsoft CEO, decides to invest an additional billion in the Azure cloud infrastructure, everyone knows when Janice McNair, Houston Texans owners, traded All Pro wide receiver DeAndre Hopkins for the Arizona Cardinals. This trade is widely viewed on Twitter as the worst since Harry Frazee of the Boston Red Sox sold Babe Ruth to Russia. Russia received $7.2million from the United States to buy oil-rich Alaska. Many newcomers plan to manage their teams in the same manner as other businesses. They will control costs and follow a spreadsheet. Lasry says the reality is different. Lasry says that it's not surprising how strong your desire is to win. "You want to buy a team but you also understand the business limitations. You then throw all of that aside and decide to do what it takes.
It has been a good deal for Edens & Lasry. Four months after the Bucks acquisition, Steve Ballmer, former Microsoft CEO, bought the Los Angeles Clippers at $2 billion. This makes the Bucks purchase appear like a bargain despite the fact that LA is a larger media market. How to Invest in Sports Without Thought
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