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$450 million sale, are sports recession-proof?


Recently, it was announced that the Golden State Warriors are to be sold for a record $450 million pending approval by the NBA Board of Governors.  This franchise, that made the playoffs only once in the past 16 seasons, is the latest example that sports may be recession-proof.

The change in ownership among professional sports teams is a carousel that can provide an organization with years of hope, tribulation or new rivalries. One of the earliest examples might be the purchase of the Boston Red Sox in 1916 for around $500,000, a purchase that initially paid off with a World Series championship in 1918.  

Shortly thereafter, the team began to struggle and the Red Sox – Yankees rivalry was born with the sale of Babe Ruth.  It was later determined that owner Harry Frazee had sold the contract of Ruth in order to finance a stage play entitled “My Lady Friends”.  Regardless, the rivalry had evolved and the Yankees would find great success with Ruth and other players acquired by the organization.

The state of Michigan has perhaps some of the richest history in sports. In terms of ownership, one of the most unique paths to ownership took place when Tom Monaghan purchased the Detroit Tigers in 1983.  

In the years leading up to the sale, Monaghan had enrolled at the University of Michigan and while still a student there borrowed $500 to purchase a small pizza store called DomiNick’s in Ypsilanti, Michigan in 1959 along with his brother.  After the opening of three more stores, Tom traded a Volkswagon Beetle to James for his half of the ownership. 

Monaghan, a lifelong Detroit Tigers fan saw the business grow into Domino’s Pizza and that’s when the eccentric owner realized a childhood dream and purchased of the team for $53 million. The first day of spring training, Monaghan showed up in the Tigers dugout donned in a Tiger uniform and hat, ready to ‘play ball’. And play ball the Tigers did as they cake-walked through a record-setting year and went on to win the World Series in 1984.  Year later in 1992, Monaghan sold the team to another pizza guru, Mike Ilitch for $85 million.

The purchase of the Detroit Tigers became the second organization owned by Ilitch, the Little Caesar’s founder. While $85 million for the Tigers sounds like pocket change in the sports world of today, imagine Ilitch purchasing the NHL Detroit Red Wings team for $8 million in 1982; that sounds like a yard-sale price.

Fifteen years after the purchase, the Red Wings won back-to-back championships in 1997 and 1998 and have become one of the most successful, popular and recognized teams in sports.

Ilitch helped move the Tigers into Comerica Park in 2000 after contributing half of the $350 million required to build the stadium.  The Tigers have once again become formidable competitors and captured the American League Championship in 2006. Like Monaghan, Ilitch had a love for the Tigers and was once offered the opportunity to become a competitor for the team himself but his demands for a larger contract were never met.

Across the country in Texas, Jerry Jones became owner of the Dallas Cowboys in 1989 after paying $65 million for the team. J.J. also had to absorb the cost of Texas Stadium’s leasing rights at an additional $75 million.

How is that investment paying off?

The ‘Boys with their world-famous Cowboys cheerleaders are said to be appraised at over $1 billion today after opening state-of-the-art Cowboys Stadium in Arlington.

Throughout the years, the cost to purchase sports franchises has soared.  That said, many organizations still show profits, some that may come from revenue sharing with wealthier large-market teams. Success isn’t always dependent on the value of the team.

Moving south into Florida, the Tampa Bay Rays soared to the American League Championship with a young core of talented players in 2008 and although they had built a winner, the team was recently listed as the 28th wealthiest team in Major League Baseball.

In the Big Apple, the New York Knicks are considered the richest team in the NBA but the last championship season came in 1973.

Across the U.S. and Canadian border sits the wealthiest team in the NHL, the Toronto Maple Leafs. The Leafs have experienced rough times and have failed to make the playoffs in the post-lockout era but is believed to make around $1.9 million per game at the Air Canada Centre – a venue they have sold out since October 2002.  

As the value of many non-sports organizations continue to plummet the general rule of thumb is that financial success tends to follow as sports stand the test of time.  The new owners of the Warriors will be greeted by crowds packing the sold-out Oracle Arena even in discouraging seasons.  

With this NBA offseason filled with LeBron James’ “The Decision” drama, Golden State has been among the most active of teams exploring the free-agent pool.  Among the new group of owners is minority Boston Celtics partner Joe Lacob.  Much like other cities that have enjoyed past success, Oakland has a long and storied history of championships with the Athletics and Raiders.  While the Warriors have only enjoyed one championship while in California the enthusiasm surrounding this deal might suggest new excitement is just beyond the horizon.  After all, both Oakland and Lacob know all about winning.

Used with permission of the author.

Cade Caldwell is an Atlanta-based sportswriter and contributor to Sports Climax.

Copyright ©2010 Sports Climax, LLC

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