Over the past decade, owners who have sold teams saw their val- ues increase by between 7 and 11 percent annually, depending on the league, according to Scott Milleisen, head of JPMorgan Chase’s Private Bank Sports Finance Unit. Much of the growth resulted from richer media-rights agreements in recent years, he adds.
What sports franchises should return-oriented CEOs con- sider? Minor League Baseball teams that are affiliated with an MLB team have been a good choice, according to Anthony DiSanti, managing director of Citi Private Bank Sports Finance and Advisory team. One of the reasons for this is that they share costs with their MLB affiliate.
With any sports investment, he adds, “the most successful clubs today are supported by a talented team of individuals with diverse experience surrounding key revenue drivers like media, real estate, retail and sponsorship.” Local owners have the best chance at creating value due to their knowledge and relationships with civic and business leaders, adds JPMorgan’s Milleisen.
“Owners are typically very involved in management of sports franchises,” he comments. “It is not always apparent to the public, but sports organizations often adopt the personality of the con- trolling owner. Owners make the most important hiring decisions, set the direction for the brand and generally guide the culture.” George Steinbrenner’s personality continues to permeate the Yankees organization even today, he says.
Rising team prices have attracted more investment groups, but individuals are continuing to buy teams. Witness the recent activity in the NFL. A Triple A baseball team will cost $20-25 million, while a team in the low minors can be had for as little as $100,000. There is an active debt market for sports teams.
On the lower end of the range, CEOs can buy a share of the Green Bay Packers for a few hundred dollars. Another alternative is to sponsor a team’s events rather than buy ownership. This is the route taken by H. Michael Schwartz, CEO of Strategic Storage Trust, a publicly registered non-traded REIT owner of self-storage facilities with the SmartStop Self Storage brand name. His company is the lead sponsor of the Team SmartStop bicycle race team and its 15 members wear the brand’s logo on their uniforms. Schwartz says sponsorship provides three kinds of benefits: “Positive brand awareness, cross-promotional opportunities and increased engagement in our social media outlets.”
Like the other CEOs profiled here, he is an enthusiastic fan. “When I attend a race,” he says, “I make sure to talk to each member of the team and its manager with the goal of offering encouragement and support.”