Want to Be an Owner of a Major Sports Franchise? - Part 1 of 2
This is one of those dreams shared by people the world over, whether it’s a Premier League Football – or Soccer, as we say in the U.S. – club, or one of the ultra-exclusive American and Canadian franchises. You can make this dream come true, but only if you have between $10 million and $1 billion lying around you don’t need.
Or maybe you can do it with just a few hundred dollars. Sound impossible? Depends on what your definition of ownership happens to be. I recently made an investment in sports franchises, which I’ll detail in Part 2 of this blog, that for most people would be prohibitive. However, let me show you how you can profit by “ownership” in a sports team.
Let’s Talk the United States and Canada Only.
Why? Because the major professional sports teams in these two countries are well known to U.S. and Canadian sports fans and have loyal followings here. Also, space precludes listing every team around the world that you can invest in.
Now let’s define “ownership.” Most – but not all – sports franchises are privately owned, whether by individuals, families, or investment groups. For example, the Chicago Cubs are owned by the Joe Ricketts Family Trust, the Cincinnati Reds by Bob Castellini, the Cleveland Guardians by Larry Dolan, the Boston Bruins by Jeremy Jacobs, the Calgary Flames by Calgary Sports and Entertainment – well, you get the idea. Very wealthy people and groups have joined this exclusive club of clubs.
There are also “minority owners” in many clubs. These are people or investment groups that have purchased a stake in rather than an entire professional sports team for what we would all consider huge sums. For example, David Blitzer purchased a minority stake in the Cleveland Guardians. The 52-year-old New York-based businessman is expected to initially own 25% to 30% of the team, with an eventual pathway to majority ownership. The deal had to be approved by Major League Baseball before it was finalized, though.
The 2022 estimate of the value of the Cleveland Guardians franchise is $1.3 billion, so a little quick math would suggest he invested approximately $325 million. Blitzer also has minority stakes in the New Jersey Devils, Philadelphia 76ers, Pittsburgh Steelers, and Real Salt Lake, making him the first person to own equity in all five major sports leagues in the United States. Obviously even minority ownership in professional sports teams is a game for only the super-rich.
What About You?
If you’re like most people and don’t have that kind of cash, ownership can come in a different form: Buying stock in a publicly owned and traded franchise. This is sort of like owning any other company stock. Purchase 100 shares of Apple Computer and you have an equity stake in the company. You’re a part owner and can even vote on important issues during annual meetings. But that’s all you can do. You don’t get a company jet and an office, nor can you sit in on board meetings.
Still, you’re an owner of sorts. There just happens to be a number of sports franchises in North America that you can purchase stock in and hopefully share in any appreciation in its price. Let’s take a look at some of them.
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New York Knicks & New York Rangers
New York is home to many sports franchises, but there are two that you can invest in through the Madison Square Garden Sports Corp. This entity owns several sports holdings of principal owner Jim Dolan. These include the NBA’s New York Knicks and their G League affiliate, the Westchester Knicks, as well as the NHL’s New York Rangers and their AHL affiliate, the Hartford Wolf Pack, plus MSG’s eSports business.
Madison Square Garden Entertainment was spun off from its sports business in April 2020, creating a separate publicly traded company for MSG’s entertainment arm, which includes the famed Madison Square Garden arena and Radio City Music Hall.
An investment in Madison Square Garden Sports Corp. isn’t necessarily an investment in just the Knicks and Rangers, however, but in all the teams under the entity’s umbrella. Profits for the company are tied to things like TV contracts and ticketing revenue.
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Green Bay Packers
The Green Bay Packers are the only publicly owned franchise in the NFL, but the team is not publicly traded. The team is owned by Green Bay Packers Inc., a publicly held nonprofit corporation made up of 537,000 shareholders. However, there are many differences between normal publicly traded stocks and stock in this team. For example, while the team refers to shares as “common stocks,” owners do not have the rights of typical common-stock owners. The stock pays no dividends, cannot be traded, and enjoys no securities-law protection.
The Packers stock also cannot increase in value and is not tied to the team’s revenue in any way. So why own “stock” in the Packers? If you’re a fan, and who in Green Bay isn’t, the stock functions as a piece of sporting memorabilia.
There have been six stock issuances since 1923, with the last one in 2021 to raise capital for renovations to Lambeau Field, the stadium where the team plays. Analysts have called the Packers shares a “worthless stock, in that it has no pecuniary value for the owner.” True, but at least owners have bragging rights!
Forbes valued the Green Bay Packers at $3.47 billion in 2021.
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Atlanta Braves
MLB’s Atlanta Braves have been owned by the publicly traded Liberty Media since 2007. Liberty Media is a huge corporation that in 2015 spun off the Braves from other parts of its business as a separate tracking stock to raise capital. A tracking stock usually is issued to monitor the performance of one part of its overall business, and owners of the stock typically have little or no voting rights at shareholder meetings.
The Braves are now included in a holding called Liberty Braves Group. It’s not just a stock that tracks the finances of the baseball team, however — the real-estate developments around the Atlanta Braves stadium, called Battery Atlanta, are also included in the holdings.
In 2022, Forbes valued the Atlanta Braves at $2.1 billion, more than quadrupling its value since 2010.
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Toronto Blue Jays
The Braves and the Toronto Blue Jays are the only teams in Major League Baseball under corporate ownership. Since 2000, the team has been owned by the publicly traded Rogers Communications, meaning the Blue Jays team isn’t itself publicly traded, so you can’t directly invest in the team. And because Rogers Communications has multiple business holdings in media and telecommunications the Jays are just a small part of its total assets.
Because Rogers Communications is so large, it’s difficult to assess the monetary value of the Blue Jays within the larger company. However, Forbes valued the Toronto Blue Jays at $1.78 billion in 2022.
Stay Tuned for Part 2
In the next installment I’ll discuss my investments in sports franchises, who the big player in private equity ownership is, and a bit about why companies are eager to invest in teams.