Those of us who can as easily take or leave the nearby presence of a major league sports team haven’t had much reason to fully internalize the business-model realities of having one in place. But, thanks to the Seattle Sonics trial (over who properly has ownership of the team), we’re getting a great insight into that. For those of us simply interested in the phenomenon, this whole bloodbath has turned into an excellent education.
Specific case in point is a lawyer-client document, just released in the course of the trial, which is one of the best pieces of reading we’ve seen on the business model and strategic considerations of obtaining and running a major league franchise. Some pieces of it may be taken as a little scandalous, and certainly it does gray out the formerly clear-cut spin of Seattle hometown advocates as the good guys and the “Oklahomans” – the current Sonics owners – as the black hats. The new document comes from the city/hometowner side, and it is quite blunt. Cynical? You might say so, but we’d just call it realistic.
You get some of that from the Powerpoint’s headline: “Why a Poisoned Well Affords a Unique Opportunity.”
If you want to run a major league sports team (and really, how many tens of millions of people have thought about it?), the report says, there are three key considerations: “Scarcity: they are hard to come by; Economics: They are hard to operate properly; Reputation: They are hard on the owner’s reputation.” All three seem at first counterintuitive; pause for a moment, and all three make sense.
Few regional franchises are ever available; the attorneys note that “for example, big four franchises have been available for sale in the Seattle market 11 times in their combined 100 years of operation.” Only about half of the NBA franchises operate at a profit at any one time (sounds like a bad business to get into if money is the objective). And: “Few sports team owners are loved (or even just not reviled) by the local community. Franchises can be seen as ‘rich boy toys,’ subsidized by [the] public.”
There’s much more, much of the rest being Seattle-specific. This is a highly recommended read.Share on Facebook