Business and sports have never been more intertwined. The debate between Yankee and Red Sox fans sooner gravitates to payrolls than which team actually has a better staff. In football, championships are won by sidestepping the salary cap as opposed to tacklers, and the latest basketball rumor has Lebron James being traded to either New York or Boston because his Nike shoe contract awards him a bonus if he plays in a major market. What’s more, Yankee great Yogi Berra was recently tapped as a pitchman to sell customers on the finer points of a certain insurance company – financial advice from the same guy that coined the saying, “A nickel ain’t worth a dime anymore.”
One group that has been ahead of the curve with regards to this union is Game Plan LLC. Launched in 1994 by Robert Caporale and Randel Vataha, GamePlan is an investment bank and advisory firm focused exclusively on sports. The firm advises on the purchase, sale and financing of professional sports teams, the formation of new leagues and the development and financing of athletic facilities.
But even before 1994, Vataha and Caporale had each been finding profits in the athletic arena. Vataha had been a wide receiver with the New England Patriots (and later the Green Bay Packers) but it wasn’t until after his playing days that he really got involved on the business end, opening up a string a of racquetball clubs. In time, he sold that business and went to work at the Boston sports agency Bob Woolf Associates, where he eventually served as the CEO.
Caporale, meanwhile, had been plying his trade at Fine & Ambrogne, the same Boston law firm that television’s David E. Kelley worked at before he created Ally McBeal and The Practice. On the legal side, Caporale earned his reputation in the sports world, and served as the attorney for the Florida Marlins, Hartford Whalers, Pittsburgh Penguins and the New Boston Garden Corp.
Caporale’s and Vataha’s paths merged in 1982, when the pair was part of a team that bought the Boston Breakers, a former franchise in the now defunct USFL. However, it wasn’t until the early 1990s that the Game Plan archetype actually took shape.
“We had seen the the sports indusrty was growing in terms of size and dollars and we realized that there really wasn’t anyplace for people to get financial advice,” Coporale told Buyouts. With that vision, Coporale and Vataha rolled up their experiences as player, agent, team owner and lawyer and created an entirely sport-focused investment bank.
Initially, the fledgling company started small, and Caporale even continued to practice law for the first couple years. Then, at the end of 1997, BankBoston (which became Fleet Bank) acquired a third of the business from the group, and the company started growing from there. The assignments became larger, while the level of activity ramped up as well. (Game Plan ultimately repurchased the stake when Bank of America acquired Fleet last year.)
Shortly after the BankBoston investment, Game Plan completed the sale of a 50% interest in the Pittsburgh Penguins, and went on to take part in a number of notable deals in the years following, including the purchases of the Montreal Canadians and the Boston Celtics and the sale of the Ottawa Senators. Last year, Game Plan also put together the sale of the Los Angeles Dodgers, and so far this year the firm has organized the bold $3.5 billion Bain Capital bid for the National Hockey League, and is currently advising one of the bidders for the Washington Nationals.
Despite the growth, though, Game Plan is still a three-man shop, with Caporale, Vataha, and Collin Vataha, Randel’s son, who serves as a senior associate at the firm. “We’ve intentionally kept it small and totally focused on the sports industry. It’s what differentiates us from the larger investment banks that may do one or two sports deals but doesn’t focus on the industry full-time,” Caporale says.
The firm does have some competition, though, as competitors such as Inner Circle Sports Ltd. and Moag & Co. have cropped up, while Lehman Brothers and Bank of America are among the large investment banks that participate in the sector.
An Industry Takes Shape
Sports teams have always changed hands, but today there’s a greater recognition that these purchases can be seen as an investment, but as valuations continue to rise, the complexities surrounding team ownership have grown exponentially. Financing has become more intricate, stadium deals more focal and ancillary revenue streams, such as merchandising and broadcasting, have to be factored into every transaction.
As this has happened, the financial community has gradually come to accept professional sports as a business and that has helped it grow as an industry. “One of the most important developments has been the recognition by the financial institutions-such as the banks and ratings agencies-that pro sports is actually an industry-a specialized industry of course-but it has become a much more recognized and financially driven business,” Caporale says.
Even as professional sports has gained status within the financial community, the buying and selling of teams is never as cut and dry as just putting together the largest bid. Caporale notes that sports ownership is typically considered a relationship driven business, “akin to a private club.” One stark example of this came in 1999 when Game Plan had brokered a deal to sell the Oakland A’s only to have the sale torpedoed by an eleventh-hour injunction from MLB Commissioner Bud Selig. That snub ultimately led to the team’s being sold to Selig’s fraternity brother from the University of Wisconsin, Lewis Wolff, this past April.
Because of this and other intricacies, even the most astute financial minds have sought out help to traverse the industry. Bain’s Stephen Pagliuca and former-Highland Capital Partners exec Wycliffe Grousbeck, saw fit to hire the firm for their Celtics bid and Game Plan is currently advising the Jonathan Ledecky / ABRY Partners bid for the Washington Nationals.
“For people coming into this business for the first time, they don’t typically have access to the information or experience that we can provide,” Caporale says. “We can recognize market conditions.”
Going forward, as the business world and sports continue to mix, Caporale believes private equity will increasingly become a factor in auctions for professional franchises. He notes anecdotally that “there already appears to be a growing interest” among firms.
Teachers’ Private Capital, Chartwell Investments, and Seaport Capital are among the few firms that have made investments in the sport industry, while others, such as Quadrangle Partners, have shown an interest as well. And as long as the banks stay involved, it can be expected that there will be more interest yet to come. “Many of the team owners come from a financial background,” Caporale identifies, adding, “one of the developments we’re seeing is that even the equity funds that have not really been around this industry [historically], have started to take a look.”