The op is taking wildly different situations and throwing them together as if they mean something together. There is no much ignorance there it is difficult to begin correcting it.
Franchises having financial problems isn’t a modern development. There have always been owners and teams having issues. The Expos and Penguins come to mind as teams that had significant financial issues about a decade ago when these things “wouldn’t have happened”.
You would expect given the weakness of the economy, expensive luxury item providers like sports team would struggle. All in all I would say pro-teams have done surprisingly well.
The sports themselves have greatly varying success. The fact some hockey teams are struggling, doesn’t mean that almost universally baseball and football teams are making rather healthy profits. I also don’t take articles where owners claim to be losing lots of money without backing up their claims to have much value.
The vast majority of teams sold recently have been for enoromous profits. The Astros, the most recent baseball team sold went for $680 million about five times what they were bought. Despite bankrupcy issues the Rangers and Cubs were not at anything resembling a discount. It is exceedingly rare for a team not to be sold at great profit.
The Tribune filed for bankrupcy and that was certainly not because the Cubs weren’t profitable (see they had this other business…) They put the Cubs briefly into bankruptcy for legal reasons, not because the cubs weren’t making them money. It is exceedingly rare for a sports franchise to be sold for a loss. I don’t how anyone can use them as an example of sports franchises having financial issues.
The Dodgers is all sorts of a mess, but again it is because of ownership monetary problems leaked into the team and not the other way around. The reason the Dodgers haven’t been sold is the owner refuses to sell them. They might eventually be sold for a loss, but it is because the owner gave all the dodger’s assets away (or took him for himself) not that the assets aren’t valuable. Another terrible example to include for your point.
In short owning a sports team is as good an investment as it has ever been. Well at least since Curt Flood took MLB to court.
But that doesn’t change the fact that they are in serious financial trouble. Yes, they got ripped off but they are still out the money. (Google what the lawyers are billing the courts.) The Mets are in serious trouble. Fault doesn’t enter into the immediate equation. They have financial obligations that they may not be able to meet no matter how much revenue they can generate. Just like the Dodgers, a divorce wasn’t part of the sales transaction but it is still has a huge impact on the franchise.
Back to the OP: The ownership of a pro sports franchise is a bubble that has burst.
The Mets aren’t in serious trouble. They aren’t in some trouble. They aren’t even in a tiny little sliver of trouble. There is no risk whatsoever of the Mets ceasing to be a profitable entity. Now there is some risk that Wilpon will have to sell some or all of the team to pay his other debts, which is of course an entirely different thing.
The Mets as a franchise aren’t in trouble. The owners are. The Mets are profitable, and someone will buy them for a lot of money if they are up for sale.
There’s no evidence to support this.
NBA- Warriors sold last year for a record $450 million
MLB- Rangers were bought in 1998 for $250 mil and sold this year for $570 mil.
NFL- I can’t find numbers on the last team sold, but they are a veritable money printing machine. Certainly no evidence of a bubble that has burst.
There are, at my count, three main issues going on with the Mets right now.
The Wilpons’ personal financial situation is in tatters, due to Bernie Madoff. This has forced them to take out loans in order to keep the team going.
They’ve chosen poorly on which players to invest in with big contracts (that’s the gist of the ESPN article), and have a lot of money already tied up for 2012, some of which is committed to players who aren’t even with the team any more.
Related to #2, they’re seriously underperforming, which leads to lower revenues, as people don’t want to pay money to see a bad team.
Issue #1 is a rather unique one (though other sports owners probably saw their portfolios take a beating over the past 3 years, too), though it may still well lead to the Wilpons being forced to sell the team.
Issues #2 and 3 have happened to other teams before. It’s likely a combination of poor management and bad luck.
I don’t see any of these issues being “smoking guns” to some systemic issue which is dragging down the values of all pro sports franchises.
Who exactly asked for and was provided that loan. Mr. Met? Or perhaps the owner who was having financial difficulty. Amazing how the team’s financial problems coincided with Madoff scandal. Weird huh?
Of course I’d invest in it. Sports franchises are about the safest investments you can make, almost always providing a huge profit when sold along with yearly divendends. Teams that are under valued due to poor ownership would make an even better investment opportunity.
The problem isn’t with overall value it’s with liquidity. The moment these owners get caught up in bankruptcy, bad investments or divorce proceedings their liquidity dries up because nobody wants to make a loan that will get tangled up in the courts.
Owning a team is a cash heavy business because your assets are contracts.
I’d argue that there were several expansion locations, Atlanta included, that were not going to succeed no matter how financially well-positioned their owners were. Like many internet failures of the 2000s, the NHL thought that you could build the infrastructure first, and demand would rise naturally. What they should have realized was that you should first build where the demand already exists (Canada, obviously), and slowly expand to unknown markets.
The Southern strategy was the NHL’s big grab at a huge television deal. They thought that if the new teams were successful, even for a few years, they could negotiate a big TV deal that would pay for any bad expansions that had taken place. Unfortunately, that success didn’t happen, so teams were left to pay for their rosters the old-fashioned way-- gate receipts. Hard to do when you’re drawing 8,000 fans a night at the lowest prices in the league.
Yes, having overleveraged owners probably accelerated the league’s crash (punctuated by the lost season), but I would argue a 30 team NHL was going to have that crash sooner or later.
Step 1 was Atlanta moving to Winnipeg. Now we need to take 2 or 3 more of those struggling southern teams and move them to Hamilton, Toronto, and Vancouver.
Vancouver has a team. Well, they have the Canucks anyways… move a struggling southern team to Québec City!
By the sounds of it, the “financial issues” facing hockey teams are quite different that those facing other sports teams. It sounds like most struggling NFL, NBA or MLB owner could sell his team and get their money back, if not a profit. The markets for those sports are valid; there’s a fan base and tv revenues and decent facilities.
That doesn’t seem to be true at all for the NHL teams; I’ve really only been following the ownership problems of the Coyotes, but they can’t seem to find anyone willing to take on that mess (and the bad arena lease is a major part of why). No one stepped up and said “we want to own the Thrashers” even after a couple of years of the team being on the market and a pretty good arena deal (IIRC?); they are now in Winnipeg. The markets are bad for the sport - small fan base, no TV deal, bad arena deals - and for the struggling teams, they are a losing investment.
It seems pretty reasonable. The whole Coyotes situation is a mess because the city of Glendale was colossally stupid and decided to give the team the arena they wanted. Gary Bettman has been trying to extort numerous cities for arenas, with the threat of relocation if teams don’t comply. Well, this one did comply, so he can’t move the team for fear that other cities won’t bother building arenas just to have their team snatched away a few years later. So you end up with a team that isn’t drawing enough, stuck in a new venue and is costing both the league and the city millions of dollars. Egads.
Because most of the revenue for NHL teams comes from their gate receipts, any team that can’t hold its weight in attendance should be targeted for a potential move.
There was a paper published in April that discussed the likely destinations for NHL relocations–and also suggested that Canada could support as many as 12 teams, with two in Vancouver, three in the greater Toronto area, two in Montreal, and teams in Winnipeg, Calgary, Edmonton, Ottawa, and Quebec City.
I would move a second team to Montreal before I gave another team to Vancouver. But of course, I’m the guy who says it depends on where the owners are; I think Winnipeg is a really marginal choice, but that’s where committed and wealthy ownership was to be found.
Dude, you’re the one taking disparate situations, and trying to come to some larger conclusion about them (and ignoring evidence to the contrary, such as the still-increasing valuation of most franchises).
Yes, there are owners who are in trouble – and, most of them seem to be people or groups which overleveraged themselves to buy the teams. In the economy of the past few years, being overleveraged in any business is a bad idea. This isn’t a sign that pro sports has a particular issue.
Yes, there are some teams which are in trouble, but it doesn’t look, to me, to be an endemic issue.
I was about to say, “but, hell, neither you nor I are in a position to own a pro sports franchise”…and then I remembered my one share of Green Bay Packer stock.
The funny thing is that if he actually had $300m to throw around 10 years ago, he would have made a KILLING on his investment if he had purchased a professional (read: not NHL) sports franchise in the US.
