Monday, January 16, 2012

Sport Capitalism

This is a response to Mark's post about the Green Bay Packers from yesterday. To summarize:
  • The Packers are owned by the public
  • Packers fans fill Lambeau field to the tune of a 31-year waiting list for season tickets
  • If the Jets drew the same fans-to-local-population ratio, they would need 5.4 million fans per game (you guys know how I love stats that support a point)
  • Since the team is owned by a large group of people, the GM is given a lot of power and has a lot of expectations to meet. Because he does not own any of the team, he is not protected by the whole "I paid for the team so I am going to be here as long as I want" theory like a lot of owners

I really like the idea of the fans owning the team. It works for Green Bay. It works for other public teams, like Tottenham Hotspur and Juventus. I thought Barcelona was also public. (Does a little bit of internet research) Barcelona is not a traditional public company; one cannot buy shares in the company, but rather membership. So it's essentially the same thing, only they are not run by the public and they are $500 million in debt. But regardless, these 3 football clubs are among the most respected in their respective countries. It's not a stretch to say that Barca might be the most-respected in the entire world.

There are three major upsides to public ownership. One, as mentioned before, is that a committee of fans holds its executives to a high standard and want the team to succeed - not just to turn a profit. A sports team is different from a normal company because the goal is not always to make money. The goal is to win. Unless you are the Pittsburgh Pirates - then the goal is to turn a profit. Two, it encourages the owners/fans to attend games to support their team/investment. Attendance is always a good thing. And maybe, the owners could decide to not charge themselves $9 for a Bud Light. Or even an Owners' Box sort of thing where VIPs can get food and drinks for less. Three, an IPO is a great way to raise money for the franchise.

There are a few teams that come to mind when I think about sports franchises that need help with finances and with ownership: the New York Mets, the Sacramento Kings, the Los Angeles Dodgers, and (most importantly) the New Orleans Hornets.

I'll use the Hornets as an example now because their situation is one that is well-documented. They're owned by the league and it's causing a lot of problems, controversy, and futility. They can't find an owner to buy the team for a price of around $325 million. Here's a new look: maybe try to find 100,000 owners to buy the team for around $350 million. The number of shares could be higher, but I don't know how many people would really be interested in buying shares. A little bit of long division for you: that's $3500 a share. As a basketball fan (not even a Hornets fan), that's something I would consider. The opportunity to help rebuild a franchise. If they lived in my area, I would also get the opportunity to only pay $4 for a shitty beer.

I'll make you guys a promise right now: if we make enough money in ad revenue to buy shares of an American professional sports team, (given that at least one of such teams will sell shares) the Bullets Blog will buy shares and do our very best to run the franchise in a winning way. Maybe one day we'll make enough to just buy a team outright. Hell, we're probably not that far away from the Mets right now.

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