Mark Walter promised a bright future when he bought the Los Angeles Lakers last year. That future is already passed. Walter flipped the team to new owners this month, netting a reported $2.5 billion profit. Dollar signs have always dominated the big leagues, but sports ownership is increasingly reserved for corporations, private equity and superrich investors. Where does that leave fans?
‘Highly sticky consumer base’
Jerry Buss and his children ran the Lakers as the “NBA’s version of a mom-and-pop shop” for decades before last year’s sale to Walter, Benjamin Wilhelm and Samuel Agini said at the Financial Times. The days when a local businessman would buy and run a team as a sort of community trust are over. Instead, the “shock sale” of the Lakers demonstrates how pro teams are “no longer treated as vanity assets but legitimate investment vehicles.”
The new generation of sports owners look like Bob Iger, the former Disney CEO who now co-owns the Lakers. They are “billionaire financiers” who see professional sports as a business sector “resistant to potential disruption from AI” and have access to “deep pools of capital,” said the Financial Times.
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Sports are good business thanks to a “highly sticky consumer base” of die-hard fans and “contractual revenue streams” for broadcast rights that produce massive revenues, MAI Capital Management’s Kurt Nye said to Investment News. Pro teams are thus selling at “prices that would have seemed implausible a decade ago,” said the outlet. The NFL’s Seattle Seahawks sold for $9.612 billion in July, while the Chicago Bulls were valued at $6.45 billion when Walmart heir Lukas Walton bought a 10% stake in June. Those sky-high valuations now make franchises “legitimate portfolio planning territory” for the highest-dollar investors.
It can be messy territory. The Buss family announced this week it is selling its remaining minority stake in the Lakers, said The Athletic. But that sale is opposed by Jeanie Buss, who led the franchise in recent years. The “bitter dispute” between Buss and her siblings could end up in court.
Fans ‘pay through the nose’
Team owners are “flush and want to be even flusher,” Mike Lupica said at the New York Daily News. The “sure thing” profits from ownership come in part because owners like Walter and the Knicks’ James Dolan “charge vulgar amounts for ticket prices” for the fans who keep the enterprise going. Many Knicks fans could not afford tickets to Madison Square Garden during the team’s recent championship run. Fans pay “through the nose” while team owners keep winning big money “whether their teams win or not.”
The Lakers sale is “exactly why we need publicly owned sports teams,” Dave Zirin said at The Nation. Team owners have long had “zero regard” for communities where their franchises “have taken root.” But franchises belonged to their communities “spiritually, psychologically, personally” before they became “just another asset” in private equity portfolios. When sports billionaires buy our teams they are “buying our joy.”
