Lots of people dream about owning a sports franchise, but those who actually fulfill that dream belong to a very exclusive club. For the rest of us, there are opportunities for fractional ownership of sports teams by investing in the corporate parents that own those teams.
While professional sports may appear to be lucrative due to the huge player contracts, the reality is many team owners don't seek profits but an increase in value. Even before the global lockdown and quarantines disrupted play (and thus profits) of every professional sports league, the truth is a number of teams were consistently losing money. The value of franchises like the Dallas Cowboys, however, have increased in value year after year.
According to reports acquired by ESPN, NBA revenues fell by 10% in the 2019–2020 season.
Assuming things in the sports world do get back to normal, here are some ways you can get into the game, even if you don't have a bank account the size of Dallas Mavericks owner Mark Cuban.
Corporate Ownerships and Affiliations
Several major companies have stakes in professional sports teams, or the companies have an affiliation with the owner. Unfortunately, buying shares in these companies won't get you box seats, free tickets, or other perks, but it may add an extra element of excitement when you tune in to watch its teams play. Here are some popular franchises and their owners:
- Miami Heat: The Heat's owner is Mickey Arison, CEO of Carnival Corporation, the world's largest cruise ship operator.
- Seattle Mariners: The Mariners' owner is Nintendo of America, one of the world's largest videogame manufacturers.
- Chicago Cubs: The Cubs are owned by a family trust established by TD Ameritrade founder Joe Ricketts.
- Toronto Blue Jays: The Jays' owner is the Rogers Blue Jays Baseball Partnership, a division of Rogers Communications.
- New York Knicks and New York Rangers: Both teams are owned by Madison Square Garden Sports Corp.
- Atlanta Braves: The Braves are owned by Liberty Capital Group, a division of Liberty Media Corporation.
- Philadelphia Flyers: The Flyers' owner is Comcast-Spectacor, a Philadelphia-based sports and entertainment firm.
Another well-known corporate owner was the Walt Disney Company, but it sold its stakes in the Anaheim Ducks and Los Angeles Angels.
Exchange Traded Funds (ETF)
Another option is to invest in ETFs that have a small percentage of investments in companies with sports team exposure. Here are a few to consider:
- EWJ: The iShares MSCI Japan Index Fund
- FXD: The First Trust Consumer Discretionary AlphaDEX Fund
- IAI: The iShares Dow Jones U.S. Broker Dealers Index Fund
- IST: The SPDR S&P International Telecommunications Sector ETF
- PEJ: The Invesco Trust Dynamic Leisure & Entertainment Portfolio
- PBS: The Invesco Trust Dynamic Media Portfolio
Green Bay Packers
The Packers, named after Curly Lambeau's employer, the Indian Packing Company, is the only professional sports team that actually sells stock directly to the public. When the franchise floundered in the early 1900s, local businessmen nicknamed the "Hungry Five" formed the nonprofit Green Bay Football Corporation. Stock sales occurred in 1923, 1935, 1950, 1997, and 2011. There are 361,169 shareholders holding a total of 5,009,562 shares of stock, and the articles of incorporation prevent any individual from owning more than 200,000 shares.
On Dec. 6, 2011, the Packers offered 250,000 shares at a price of $250 each, raising $64 million to help pay for Lambeau Field renovations. In the first 11 minutes, 1600 shares were claimed by investors for a take of $400,000. There were no dividends and no capital appreciation, and shareholders were subject to the same NFL rules as other team owners regarding ethical conduct and betting on games.
Fans of the team in the nation's smallest market bought the stock as a show of pride, team support, and bragging rights. They also got a few perks, such as special stadium tours and access to rookie practices. The sale ended in February 2012.
For those who aren't super-rich but still want to own part of a team, one way to get a foot in the door is with a minor league team. Venture capitalists and institutional investors have been putting together financing deals for ownership groups that focus on teams in small markets.
The independent teams aren't burdened by the rules and obligations of league affiliations. In recent years many teams have upgraded their facilities to better compete with the big leagues. The lowest entry prices are available for struggling hockey teams as attendance falls off and their debt mounts. While there is significant risk in such investments, many teams have been turned around and become very profitable.
The Bottom Line
Whether it's investing in an affiliated corporation, ETF, minor league team, or the next round of Packers financing, investing in a sports team could be a fun and unique way to diversify your portfolio.