Want to buy a pro sports team? If you don't have $1 billion and would mind losing $30 million or $40 million a year, you might want to pass.
The sometimes good, often bad and really ugly side of pro sports ownership and its financing got aired out Wednesday at a sports business conference at St. Petersburg's Renaissance Vinoy Resort. While the event was supposed to be a gathering of sports dealmakers, sponsored by the Florida chapters of the Association of Corporate Growth, the meeting's cautionary tone was in synch with a broader economy still on the mend.
But packed with so many sports business experts, even the Vinoy carried the whiff of a pro locker room by the end of the day. The business of sports is slowly getting stronger, these experts said. Just be sure to have deep pockets and a true love of sports to endure the pains of a recession.
"There are not a lot of healthy transactions of sports franchises, but there are a lot of distressed ones" — like the latest sale of the Tampa Bay Lightning, said investment banker Brian Marler with Houlihan Lokey. He rattled off other recent troubled team sales as if reciting the alphabet. The NHL's Phoenix Coyotes, MLB's Texas Rangers and the Chicago Cubs.
Financing of pro sports teams hit a wall back in 2008 after Wall Street's Lehman Bros. failed and did not start to return until late last year, said Goldman Sachs managing director Greg Carey, the head of its sport facility finance practice. His dealmaking resume ranges from the new New York Yankees stadium to the early refinancing of Tropicana Field before it ever boasted that sponsor's name and long before the Tampa Bay Devil Rays baseball franchise started playing there.
"Before 2008, we saw too many rich guys chasing too few sports deals," said investment banker Steve Horowitz with Inner Circle Sports LLC. "The idea of writing a check seemed fun when you had a lot of money — before the stock market went down."
A few lessons emerged for Tampa Bay's sports economy.
Malcolm Glazer paid roughly $190 million in 1995 when he purchased the Tampa Bay Buccaneers. It seemed rich at the time, but Glazer's wealth allowed his family to hold on to the franchise. Now the team's value is approaching $1 billion.
For all that appreciation, the Bucs became the Glazer's No. 2 sports asset after the family acquired control of Britain's Manchester United soccer team. It's considered the most valuable sports franchise in the world.
Early this year, Jeff Vinik bought the Tampa Bay Lightning for about $110 million. The seller, OK Hockey, paid about $200 million in June 2008 and didn't have the bucks to survive tough economic times. Vinik has probably picked himself quite an investment.
The Tampa Bay Rays' quest for a new stadium didn't get much attention. Goldman Sachs' Carey defended public funding, arguing stadiums are similar to museums or other forms of entertainment that generate activity and commerce for a city.
Horowitz suggested the country's in the "eighth or ninth inning" on new sports stadiums.
"There are not that many left to be done," he said.
Maybe. But as the Rays showed time and again this year in late-inning comebacks, it ain't over 'til it's over.
Robert Trigaux can be reached at firstname.lastname@example.org.