For Wins or Profit?

Should owners buy teams to make a profit or to win games? There are certainly owners on both sides. Some owners, the Mark Cubans, Jerry Joneses, Steinbrenners, Dan Snyders, etc will spend whatever it takes to win, or at least to try to win. Others like Robert Sarver, Donald Sterling, Jeffrey Loria, etc would sacrifice talent to save a dime. Who is in the right? Well, it seems to me that those owners who spend exorbitant amounts might lose in the short term, but a winning team inevitably brings more fans and bigger profits in the end. Of course, some of these teams (like the Yankees) are helped by historical successes, but history shows that the best way to make money is to put a winning team on the field. And, the best way to do this is for the owner to spend the money needed, so in essence there is a circular effect. As stated previously, I don’t think owners should buy teams to make a profit. Invest in something else if money’s the only motive. I also don’t think every team has to spend a fortune, but why own a sports team if you’re only committed to making a few bucks. There seem to be plenty of other industries with better returns for that. Here are a couple articles on two of the most penny-pinching owners.

http://bleacherreport.com/articles/408192-sarver-not-fit-of-owning-an-nba-franchise

http://www.clipsnation.com/2011/1/11/1928854/the-real-problem-with-donald-sterling

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2 thoughts on “For Wins or Profit?

  1. “…history shows that the best way to make money is to put a winning team on the field.” Does it? Can you find any good data showing a direct correlation? (Note: even with a generous definition of “winning team”, it would follow that only a few franchises in any league can successfully pursue this strategy for making money. By definition, most teams will be losers….

    • There are many ways to create value within a sports franchise, but the most feasible is to have a winning team. Obviously every team cannot win every year but the teams that win the most often populate the list of Forbes most valuable franchises. This list also includes a disproportionate number of NFL teams as well as some teams that have been bad recently but have a storied history and thus dedicated fans regardless of current record. The history of a team, and the success of its league are not necessarily within an owners control however so team success is the most important variable that an owner can control that leads to profits. Winning not only leads to increased ticket sales and TV revenue but can eventually lead to the worldwide branding success that separates the top teams on the list such as Manchester United and the New York Yankees from the rest. The link to the list is here. http://www.forbes.com/sites/kurtbadenhausen/2011/07/12/the-worlds-50-most-valuable-sports-teams/

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