Professional sports teams owned by the likes of Paul Allen, George Steinbrenner and Jerry Jones are bought and sold for hundreds of millions of dollars. The Seattle SuperSonics were sold for $350 million in 2006 and the Boston Red Sox went for approximately $700 million in 2001, placing them firmly out of reach for most non-moguls. But sports teams in the minor and independent leagues, particularly when purchased through partnerships, could be a more affordable option for investors interested in watching games from the owner’s box.
Even minor league teams don’t come cheap: Minor League Baseball teams can range from $650,000 for rookie teams to $10 million or more for Triple-A teams, according to the official Minor League Baseball website. Minor League Baseball teams have the potential to bring in a net profit from 5 to 10 percent a year and appreciated an average of 3 to 5 percent annually as of 2006, according to Satisfaction Magazine.
Teams are often purchased by individuals, but multiple buyers can band together as part of a limited liability company (LLC). Anne Levinson, Ginny Gilder, Lisa Brummel and Dawn Trudeau formed Force 10 Hoops, LLC to purchase the WNBA’s Seattle Storm for $10 million in January. The concept of sports investment funds has generally been ill received—most investors want to put their money into specific teams with which they can be involved—but potential owners can put together their own groups to purchase a franchise. In such situations, there is often a majority team owner.
Such is the case with Harris Turer, majority owner of the Milwaukee Admirals and minority owner of the Milwaukee Brewers. The Admirals are a minor league hockey team owned by Milwaukee Admirals, LLC, a group of 12 investors.
A team owner oversees activities and can choose to take a hands-on approach Investors could also start a new franchise within an existing league. “There are all kinds of startup costs [when creating a new team]. If it’s a brand new franchise, you incur costs recruiting people and getting the front office completely set up. There are a lot of startup marketing costs to let people know you’re coming to town,” Allen Fears, chief financial officer for sports consulting firm National Sports Services (NSS), said. “If you’re buying an existing team you’re going to pay more money to the existing owner but you’re not going to have those startup costs.” Starting a new team involves a lengthy application process, meeting the league’s legal requirements and proving one’s ability to financially support the team.
Often team owners function mostly as a chairman or chairwoman, overseeing activities without necessarily being involved in the day-to-day operations of the franchise. But owners interested in a more hands-on approach can certainly do so.
For both Turer and Merritt Paulson—owner and president of both the Portland B...
Click here to read the rest of this article from NuWire Investor
INVESTMENT NEWS
RSS