Section 4 - Teams and Ownership

Section 4 - Teams and Ownership - Part4TeamsandOwnership...

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The Business of Sports Part 4 -Teams and Ownership Story of the Phillies Lack of success on the field over a long period Criticism from fans for lack of spending to build a  competitive team Owners recognized the need to create new revenues The development of Citizens Bank Park Used new revenues and good baseball decisions to  build a winning team Culminated with a World Championship in 2008 The point: ownership decisions matter
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Differences Across Leagues and  Clubs Variations in revenues due to both market size  and management decisions According to estimates in Forbes (2009): Revenues in MLB range from $139 million (Marlins) to  $375 million (Yankees) NBA: $94 million (Milwaukee Bucks) to $208 million  (Knicks) NHL: $64 million (Islanders) to $160 million (Toronto Maple  Leafs) NFL: $195 million (Vikings) to $327 million (Washington  Redskins) Expect revenues of the Dallas Cowboys to increase in 2009 due to  Jerry Jones’ new stadium The Giants and Jets will open a new facility in the Meadowlands in 
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Ownership models Single owner, private investor model e.g., Mark Cuban, Dallas Mavericks Multiple owners, private investment syndicate model e.g., Phillies ownership Multiple owners, publicly traded corporation model Only one team in the four U.S. pro sports leagues Most often found in professional soccer leagues Has a board of directors and a senior management group Board members elected via individual shareholder voting
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Clubs as “Publicly Traded”  Corporations The Green Bay Packers are the only publicly- traded franchise NFL prohibits this form of ownership Packers grandfathered from formation in 1923 Packers sell stock mainly to raise money,  e.g., for stadium expansion and renovation Stock is not listed for trading Owners do not get dividends Profit motive not present, so no potential  conflict between economic and competitive  success
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Why Is There Opposition to  Public Ownership? Clubs may pursue objectives other than  shareholder value maximization Exclude individuals with backgrounds  inconsistent with NFL image and purpose Avoid ownership instability, i.e., takeovers,  mergers that change ownership in a public  company Desire to avoid mandatory financial  disclosure
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Publicly-Traded Corporations Several pro sports franchises have been  or are now owned by public corporations  Tribune Company – Chicago Cubs Recently sold by Sam Zell to the Ricketts Family  Liberty Media – Atlanta Braves Cablevision – New York Rangers and Knicks However, financials are not contained in  the annual reports of corporations that  own the clubs
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Section 4 - Teams and Ownership - Part4TeamsandOwnership...

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