Q: What sport makes for the best investment, financially?
A: The NFL has the best economic structure. Whether it’s the best investment depends on the amount you want to invest, as the valuations have increased substantially. That doesn’t mean there aren’t good opportunities in all of the other leagues, it just makes those leagues more market driven and circumstance driven than purely league driven.
What are some areas in sports-outside of the four major leagues-that people aren’t yet looking at that could make for an interesting investment?
Affiliated minor league baseball teams are generating a great deal of interest as are some of the other minor league teams. Oftentimes people look at them as a sort of entry-level approach [to investing in sports], while others, that are not about to play in the big leagues, financially speaking, are more willing to buy a minor league team.
Sports teams can be difficult investments for private equity funds. Fans and the press always want more capital going into player salaries, while the team’s backers want to see more fiscal restraint. How do sponsors manage to toe the line between being smart with their investment and not alienating their fans?
You always have to look at who’s going to have decision making authority when you’re dealing with a group of investors, and that can be one of the toughest parts of this business. It can also be difficult to learn how to say no. But there is extreme public pressure. It’s the only industry that has its own section in the newspaper.
Many people credit the parity among NFL teams for the overall success of the league. What are your thoughts on finding a competitive balance in other sports?
I think it’s one of the most critical issues facing the industry-one that each of the leagues has to be very strategic about in finding a workable solution. It’s a significant problem in my view. From an NFL fan’s perspective, every year each NFL city can realistically hope that their team can go all the way. That is clearly not the case in the other sports.
Concepts such as a luxury tax and revenue sharing are considered vital to parity, but from an investor’s perspective, it seems like it would have to be difficult to concede those points.
It’s a very difficult and contentious issue, but in my opinion it needs to addressed, and addressed with a long term view… It needs to be looked at strategically and dealt with. It can’t just be left unresolved. They’re even talking about it in the NFL, and that’s what makes the NFL different from the other leagues is that they’re not waiting for it to be a problem, they’re being proactive and strategic about it. This was fundamental to our proposal to the NHL and its teams. We don’t believe that those kinds of structural issues can be resolved in a contentious bargaining situation. That’s not where you resolve these kinds of issues.
Regarding the NHL bid, if nothing else, it was a great way to get your name out there. Do you plan to move forward with the offer and is it still on the table should the league reconsider?
We understand how difficult it is to acquire 30 teams, but at the same time we were quite serious about the offer. We have raised the debt and equity and intend to pursue [the deal], and we absolutely believe it would be a way to solve the sport’s problems and allow it to grow. At the present time we have no plans to abandon the project and we intend to pursue it and stay in touch with the league in order to monitor what’s going on.