Due to the soaring salaries commanded by many professional athletes and the presence of salary caps in many sports, sound business management is more important than ever in order to ensure on-field success. This article will briefly examine the impact that business decisions can have on the performance of sports teams.
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Many pro sports owners have taken actions that have helped or even saved their teams. One such example is Mario Lemieux, owner of the Pittsburgh Penguins in the National Hockey League. Following Lemieux's retirement as a player, the Penguins filed for bankruptcy in 1998 and there was a real possibility of relocating out of Pittsburgh. Lemieux stepped in and purchased a controlling stake in the team, providing financial stability, securing a new stadium deal and keeping the team in Pittsburgh.
Smart moves with player personnel improved the team's on-ice performance and the Penguins won the 2009 Stanley Cup championship. A more exciting product and better marketing resulted in an increase in attendance as well; after averaging a league low 11,877 fans in 2003-2004, the team averaged more than 17,000 fans in 2010. (If you had placed these wagers, you would be very rich in 2010. Check out Sports Bets That Would Have Made You Rich In 2009.)
Another owner that has made wise decisions has been George Steinbrenner of the New York Yankees. Although many sports fans argue that the Yankees have a built-in advantage because they spend the most money, this does not change the fact that the organization has been extremely successful over the last 15 years. Although having money to spend is one thing, it is the owner that approves the actual spending of the money and then hires the talent evaluators who will decide how and where it will be spent. (These multi-million dollar contracts have haunted the players who scored them, then failed to deliver. Don't miss Top 10 Most Hair-Raising Sports Contracts.)
The Yankees long run of success points to the fact that Steinbrenner has capitalized on his team's built-in advantages and made the moves necessary to win championships. After purchasing the team for $10 million in 1973, the Yankees are now valued in excess of $1.5 billion by Forbes, a 150-fold increase in less than 40 years!
Robert K. Kraft
One of the most difficult challenges facing sports club owners these days is the presence of a salary-cap. In the National Football League, this has led to an era of parity in which many teams are good one year and terrible the next. The New England Patriots, under owner Bob Kraft, are one of the exceptions to this rule.
Kraft has provided stability within the organization by maintaining coach Bill Belichick and the team has spent its money wisely. Despite the high level of player turnover which is common in the NFL, the Patriots have managed to produce winning teams year after year. In 1994 when Kraft bought the team, the Patriots ranked last in the NFL in both attendance and revenue. Since that time, the team has sold out every single home game, and the franchise that was last in revenue is now worth in excess of $1.2 billion by Forbes.
Allen "Al" Davis
For every sports owner credited with saving their team, there is another blamed for destroying their team. One prominent example in the National Football League is the Oakland Raiders owner Al Davis. For nearly a decade, Davis has hired and fired coach after coach and consistently overruled his talent evaluators by drafting players that fail to live up to their potential. As a result, the Raiders have been one of the worst teams in football recently and many Raiders fans have lost hope that things will improve as long as Davis remains in charge.
Sometimes difficulties in an owner's primary business or personal life can result in poor performance for a sports team. A recent example in baseball includes the San Diego Padres who have experienced uncertainty following instability in ownership as a result of divorce. Padres owner John Moores bought the team 15 years ago for $82 million and sold it last year for $500 million as part of his divorce settlement. While that is a nice profit on the surface, he has also left behind "a team choking on stadium debt with plunging attendance and little talent," according to Lee Hamilton of sdnn.com.
The owners of sports franchises operate much like the CEO of a major corporation. In a major corporation, the actions of many employees produce results; in a sports franchise the players, coaches and talent evaluators determine to large degree the day-to-day success or failure of the team.
However, just like a CEO, sports club owners wield enormous power and have the ability to make wide-ranging decisions that have either a positive or negative impact. The club's owner sets the strategic direction of the team and the overall tone of the organization. As such, a sports team owner might be the single most important individual when it comes to determining the level of a team's success. (For more great sports moves, check out The Decade's Best Sports Stocks.)
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