How Publicly Traded Sports Teams are Changing the Game

How Publicly Traded Sports Teams are Changing the Game

How Publicly Traded Sports Teams are Changing the Game banner

Have you ever dreamed of owning your favorite sports team? Few of us have the means to purchase an entire sports franchise. However, an increasing number of teams, from Major League Baseball (MLB) to World Cup Soccer, are now publicly traded, meaning that ordinary fans with limited investment capital can buy a share (or 10 or 100) of teams ranging from the New York Knicks National Basketball Association (NBA) franchise to the Toronto Blue Jays MLB team.

WHAT IS A PUBLICLY TRADED SPORTS TEAM?

Traditionally, sports teams have been owned by single individuals or families, such as George Steinbrenner and the New York Yankees or Art Modell and the Cleveland Browns. However, as the value of teams exploded, the cost of building stadiums increased, and the amount of money needed to attract key players increased exponentially, the price tag of professional sports teams became too high even for the world’s wealthiest individuals. That’s when owners began to explore taking their teams public to raise capital and ease the burden of increasing expenses.

In addition to having multiple owners, transparency is the big difference between publicly traded sports teams and those that are privately owned. The U.S. Securities and Exchange Commission (SEC) requirements (and the requirements of other world markets) mean that public companies have to file disclosure forms about ownership and finances and submit an annual report to shareholders.

Advantages and Disadvantages

One of the primary advantages of being publicly traded is that the financing burden doesn’t fall solely on a single person or business entity. The cost and the risk are spread out among all shareholders. This is especially useful for new teams or teams that are moving to a new city where a stadium is part of the deal. New stadium construction can cost more than a billion dollars. The new Yankee Stadium came in at $2.3 billion in 2009. While city taxpayers bear a portion of most stadium construction costs, citizens are increasingly less enthusiastic about paying for sports arenas.

Offering shares of a team to the public is also a great way to boost team loyalty. Who doesn’t want to own a piece of their favorite sports franchise? Most people will never have the financial means to own an entire team. Owning a few shares is the next best thing.

The primary downside to being publicly traded is that management has to answer to many bosses, namely the shareholders. There are few secrets in a publicly traded company, as all financial transactions must be disclosed to shareholders. In addition, sports leagues may have restrictions regarding ownership. For example, the National Football League (NFL) requires the lead investor of an ownership group to have at least a 30 percent equity stake in the purchase and no ownership group can exceed 25 people, including the lead investor.

CURRENT PUBLICLY TRADED SPORTS TEAMS

Quite a few popular teams are publicly traded. You may not even realize that you can own a small piece of the action. A few better-known publicly traded sports teams include:

Manchester United FC

The UK’s Manchester United football (soccer) team is one of the most successful in the world. Founded in 1887, the team has won 20 Premier League titles and 12 FA Cup titles in its storied history. Team owners took the team public via the London Stock Exchange in 1997, an arrangement that ended in 2005. The period wasn’t a pleasant one for investors. The stock lost more than half of its value (54.2%) over the eight years it was traded publicly.

The Glazer family, the team’s US-based owners, took the team public again in 2012, and it is currently listed on the New York Stock Exchange (NYSE) under the ticker code MANU. The stock has fared much better since making the move to the NYSE.

Borussia Dortmund

Borussia Dortmund, one of Germany’s most renowned football clubs, stands out for its on-field prowess and its unique status as a publicly traded sports team. The club, listed on the Frankfurt Stock Exchange (BORUF), allows fans and investors to hold shares, fostering a distinctive connection between the team and its supporters. This public trading aspect provides financial transparency and will enable fans to participate in the club’s success beyond the realm of fandom. Borussia Dortmund’s innovative approach to being a publicly traded entity sets it apart in the football world, showcasing a model that combines sporting excellence with a unique form of fan engagement through shared ownership.

Madison Square Garden Sports

Founded in 2015, Madison Square Garden Sports is a holding company that owns several sports teams, including the New York Knicks basketball team and the New York Rangers hockey team. The company’s stock is listed on the NYSE under the ticker code MSGS.

New York Knicks

The NBA’s New York Knicks is publicly traded as a part of Madison Square Garden Sports Corporation (MSGS). The Knicks have also added a virtual element to the mix with Knicks Gaming, an online basketball team. Knicks Gaming is also a part of MSGS.

New York Rangers

The National Hockey League’s (NHL) New York Rangers is another part of Madison Square Garden Sports, as is their American Hockey League affiliate, the Hartford Wolf Pack.

Atlanta Braves

The Atlanta Braves MLB team is another sports franchise that is publicly traded. The Braves are owned by the Liberty Braves Group, a holding company that also owns various real estate properties surrounding Braves Stadium. It is one of two MLB teams that are owned by publicly traded corporations (along with the Blue Jays, below).

Toronto Blue Jays

Rogers Communications, a Canadian communications and media company, purchased 80 percent of the Toronto Blue Jays in 2000, eventually adding the other 20 percent to its holdings. While the team itself isn’t publicly traded, Rogers Communications, which also owns the Toronto Maple Leafs (NHL), the Toronto Raptors (NBA) and Toronto FC (football/soccer), is publicly traded.

THE FUTURE OF PUBLICLY TRADED SPORTS TEAMS

While sports fans tend to be enthusiastic about their publicly traded sports teams, the market is less so. Sports franchises, on their own, don’t react the same way to market influences as other types of companies. For example, as revenue is tied to stadium attendance and media broadcast fees, a mediocre or losing season can dramatically affect the profitability of a team. So can the price of players. What happens if that multi-million-dollar player is injured and must be replaced with another expensive player? These factors are difficult, if not impossible, to forecast.

Still, as the expenses of owning a sports franchise increase and individual buyers are more difficult to find, expect more teams to go public to raise money and spread out the risk. This will also likely open more sports leadership positions to qualified individuals who don’t happen to be members of a sports franchise-owning family.

EARNING A SPORTS LEADERSHIP DEGREE AT JOHNSON & WALES UNIVERSITY

Johnson & Wales University offers an MBA in Sports Leadership degree program. This two-year program prepares students for leadership roles in the unique and challenging world of sports teams and venue management. This program is offered both on-campus and online, making it much easier for working students to schedule class time and assignments.

A sampling of the coursework for this MBA program includes Sports and Entertainment Venues & Events, Development & Management, Operations Management, Contemporary Leadership Strategies in Sports, Effective Communication Strategies in Sports, and Global Issues in Sport Leadership.

ABOUT JOHNSON & WALES UNIVERSITY

Johnson & Wales University offers undergraduate, graduate, and doctoral degree programs in more than 50 fields of study. Founded in 1914, Johnson & Wales has a current enrollment of around 8,000 undergraduate, graduate, and doctoral students. The university is accredited by the New England Commission of Higher Education. Financial aid is available for qualified students.

For more information about completing your degree online or on-campus, complete the Request Info form, call 855-JWU-1881, or email [email protected].

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