Is sports franchise ownership a hobby for the rich?


Graydon Gordian just posted a round up of the Sports and Labor relations panel from this morning. I’ll leave it to you to follow the link and soak in his impressions.

One question regarding this discussion—how to grow the league and make it more profitable for owners—that was only briefly discussed is whether franchises are ultimately businesses or toys for the exceptionally affluent.

Another way of asking this question is what kind of wealth should the NBA allow into its ownership group?

Something to remember about NBA owners is that, generally speaking, they’ve accumulated wealth with a core of businesses that allowed them to get so amazingly rich that they qualify for ownership of a pro sports team. How much is your fantasy league buy-in in comparison to your annual salary? It sounds absurd—I’m not suggesting a strict comparative scale—but that analogy is not entirely dissimilar to ownership of a sports team.

Increasingly, I think the NBA needs more owners like Mark Cuban and less like George Shinn, the former owner of the New Orleans Hornets. Owners whose wealth is not inseparably tied to the the financial health of the NBA or their respective franchise. The NBA needs owners who are willing to take on a franchise as an insanely expensive hobby.

This is not to say that every NBA owner should have the same net worth of Mark Cuban. But we should be realistic about what’s going on here.  NBA teams are as much a hobby as they are a business.

  • Greyberger

    Wow Tim I feel the opposite way.

    I think there are two kinds of ‘bad’ NBA owners: the cheapskates and the meddlers. Owners who nickel and dime their teams to irrelevancy, well that problem can be solved with a richer owner.

    That still leaves us (by my count) with a bunch of owners who have the pocketbook but not the common sense to stay out of basketball affairs. NBA owners run the gamut from the hands off approach to the kind that barge in the draft room to micro-manage the coach and GM.

    Coaches and GMs have no job security on most NBA teams, and so their tenure becomes about satisfying the owner’s whims first and running the basketball team second. With the constant pressure of getting fired, even when they get to make their own decisions they move out of desperation.

    NBA owners are a motley lot. A lot of them seem to own a team just so they can make high-profile, very public decisions and engage in competition with other millionaires in an arena where somebody is paying attention. For these owners, the best interests of the team (hiring a strong GM and coach and handing them the keys with some job security) defeat the whole purpose of buying a team in the first place.

    The NBA is a league of haves and have nots – silent owners with strong organizations, stable enough to create a permanent foundation for success. And noisy, public owners, hiring and firing, making decisions for their team and embracing the media spotlight. It’s not about rich owner and poor owner, it’s about the kind who can help themselves and those who can’t.

  • DorieStreet

    The notion of even applying the word “toy” to a sport franchise is sophmoric and insulting. From the local government involvement (taxes and bonding for stadium/arena construction; allocation of law enforcement for traffic control & security); to the schedules and methods for public & private during the games: to service contracts for small & large businesses in and around the facilities & before, during, and after the contests; to corporate and civic involvement that funds charities and promotes goodwill to fans in particular and the communities where the franchises are located: these sport organizations provide not only significant economic impact for cities and regions, but when run properly and ethically, provide a positive image and become pillars in these communites for decades and generations. They are businesses first and formost. But because of their longevity and competitive success in their sport leagues, have become woven in th fabric of human living–and american history.

  • DorieStreet

    I apologize for not proof reading thoroughly (I will do better this point on).
    The third point I was making should have been posted as follows: “… to the methods and schedules for public & private transportation to and from the games…”

  • Doog

    The issue that is burying the NBA from a business standpoint is guaranteed contracts. I understand that the players deserve some protection but it prevents the correction of mistakes. Extreme example Eddy Curry. There is no way that he is should earn the 8 figure salary he is guaranteed, but someone signed him to a contract and now every dollar that goes to him in salary is wasted money. Yes the owners are ultimately responsible for those salaries, but by being in competition with each other they often make poor choices that hurt everyone (fans, players and owners). I would propose that contracts are only guaranteed for a single year at a time. You can sign a player for 3-5 years at a specified rate and if they are on the roster at a certain date the contract is guaranteed until the next year, allows long term negotiations (dont have negotiate every year) with relief for non-performing players.
    My other idea would work for all sports, salary slotting. Simply put instead of having escilating salaries for each contract players making over a threshhold amount can only be paid at a particular salary level. To make it fair to the player and to allow for downturns these levels are related to the salary cap number for the season for if the salary cap was $100M dollars an A salary would be 20% or $20M a B slot would be 15% etc. This would help in a sport like baseball with no max salary to prevent the current spiraling escialtion of salaries and would help in the NBA by automatically adjusting salaries to match expected revenues.