Sports Analytics

Sports Owners: Being Rich Isn't What It Used to Be


Los Angeles Dodgers President and Chief Executive Officer Stan Kasten

Photograph by Victor Decolongon/Getty Images

Los Angeles Dodgers President and Chief Executive Officer Stan Kasten

Day two of the MIT Sloan Sports Analytics Conference in Boston began with a panel called “The Changing Nature of Ownership,” where ESPN writer Peter Keating quizzed new Los Angeles Dodgers president and CEO Stan Kasten, NBA deputy commissioner Adam Silver,  New England Patriots president Jonathan Kraft, and ESPN president John Skipper about how being a super rich guy is not what it used to be. Here is what’s on the minds of owners now:

1. Our EBITDA hurts.

The people who run teams and leagues are the kind of people who pronounce the accounting acronym EBITDA (Earnings before interest, taxes, depreciation and amortization) as a word. They tend to elide that tricky “T” into something like “EE-BIDDA.” And they want you to know that it’s not all that great. Keating began the panel by asking if being a sports owner is the greatest job in the world, given the limited supply of teams, the seemingly endless demand for sports, and the ever-rising franchise values. “It’s a very cool gig, no question about it,” Kasten allowed, before he and Kraft explained how, unfortunately, it is still possible to lose money at it. When the Kraft Group bought the Patriots in 1994, Kraft said, they “paid $173 million for a company that had negative EBITDA.” Keating suggested that this didn’t matter so much when you can sell a franchise anytime for more than you paid. “The return comes, yes, in the sale,” Kasten said, “but all too often the EBITDA isn’t there.” Skipper was not going along with the ruse. In a hypothetical poll of owners about their reasons for owning a team, he said, “I would be surprised if EBITDA rose to the top of the list.” This much is certain: complaining about your team’s EBITDA is a pretty boss humble brag.

2. Kids these days don’t spend enough time in front of the TV.

When asked about what keeps them up at night, Kasten, Kraft, and Silver all talked about cultural shifts toward consuming entertainment in smaller chunks from increasingly more sources. “Younger people aren’t used to sitting for as long a time,” Silver said.”They are flipping channels… They have second screens. They have third screens.” Kraft was more blunt about the problem of getting young people to stay with three-hour football broadcasts. “We know it’s going to be hard to compete for their attention as teenagers if they haven’t already been addicted to it,” he said, “In a good way.”

3. Players are doing just fine, thanks.

Keating had the temerity to suggest that ownership had conquered labor in recent collective bargaining agreements. The panel wasn’t having it. “I’m not sure I would characterize that these were victories for one side or the other,” Skipper said, “I think the players are still receiving an appropriate amount of the compensation.” Silver emphasized the great leverage NBA players have as irreplaceable entertainers. “Missing a big chunk of the season and coming out with a deal where the players get 50 percent,” he said, “we didn’t see that as a victory at all.”

4. Forbes doesn’t know how to value teams.

Kasten was adamant about this. He went out of his way to slam the magazine. “We will never give any credence to Forbes’s valuations of franchises,” he said. “Here’s the problem with Forbes,” he added, returning to the subject later, “I don’t know their methodology. I don’t know what hand they throw their dart with.”

Boudway_190
Boudway is a reporter for Bloomberg Businessweek in New York.

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