Owning a sports team is not as far-fetched as we imagine it to be and it’s not only reserved for the super-rich though it does need millions of dollars to successfully manage. Before we look at how one can run a sports franchise, how does one go about acquiring a sports team?
Owning A Sports Team
Professional sports teams are not always available on the market, they only come on the market once in a while. To be approved as a new owner the current owners need to see and review your business model and decide if it will work for their sports team and keep it financially viable.
This is very important because a sports business model is not the same as any other business, the assets are rare and unique and in high demand. There are factors such as fanbase to consider when making any decision, and there are also no-monetary returns to consider such as your team’s odds on the best betting app, even though this doesn’t affect your bottom line it does increase popularity.
A professional sports team can cost anything from $100 million to over $2 billion, Steve Cohen paid $2.42 billion for the Mets while Steve Ballmer bought the LA Clippers for $2 billion. The purchase price is not all you need to budget for. There are daily running costs that need to be factored in such as labour costs and infrastructure maintenance.
Tips For Successfully Managing A Professional Sports Team
- Keep fans happy
A fanbase can make or break a sports team, sometimes fans can get upset over a move in headquarters and sports fans are not shy to voice their opinions. It’s not most businesses that have fans that claim to be able to do your job better than you, and some fans could actually do the job better and can probably afford to buy your team. Engage them and provide better experiences beyond just watching a match, they will be buying the match tickets and merchandise after all.
- Have great sponsorship
Get and keep reputable sponsors on board, sponsors are essential not just for the finances but also as goodwill ambassadors. Having quality, ethical international brands as sponsors will build a solid reputation for your team.
- Don’t Focus on the money
As much as sports can be financially rewarding it’s not wise to focus solely on the financial returns. A 2017 ESPN investigation found that almost one-third of NBA teams lost money despite having television deals. We are not saying you must run your team at a loss, just bear in mind that the first few seasons will be difficult and you will probably lose money before you make any.
- There is more than the big leagues
Everybody focuses on the big leagues like NFL, EPL, and NBA mainly because that’s where the money goes. Sponsorships and broadcasting rights are always funnelled into these leagues but there are others albeit smaller but also successful. So if you are passionate about the sport you could invest in one of these teams at a lesser cost.
- Be Patient
Patience is necessary for every kind of business and not just sports management but it’s even more pertinent in sports. According to data collected by investment bankers Allen & Co over the last thirty years, it takes five to ten years for a team to get 10% in annualised returns.
Buying a professional sports team is a complex process that needs not only good financial resources but a good understanding of the sport itself. In the past two years there has been an influx of buyers but too few sellers on the market. Business moguls worldwide have come to realise that the business of sports can be very lucrative.