Personal Business: INVESTING
A HOME TEAM OF YOUR VERY OWN
It was a grueling trip. For seven days, Ken Gross barnstormed through the Northeast on a 22-seat bus, living on french fries, late-night TV, and hoops trivia. Gross was on board with the Atlantic City Seagulls, one of 12 teams in the small U.S. Basketball League. But he wasn't on the roster: He's the owner. The 44-year-old Philadelphian paid $300,000 for the team in 1996 and spent another $400,000 to run it this season.
Gross is proof you don't have to be Ted Turner or George Steinbrenner to get in on the thrill of pro team ownership. If you don't have, say, the minimum $80 million the National Hockey League charges for new membership, your options are expanding. Arena football, women's basketball, and indoor soccer are just the start. All told, nearly 60 smaller leagues operate in traditional sports such as baseball and hockey, and in growing niches including bicycling and roller hockey.
Franchises in the fledgling Professional Bicycle League (PBL)--which hopes to pit two cities' teams on a racetrack oval--can run as little as $50,000. A new team in the National Lacrosse League costs $250,000. Naturally, prices escalate in high-profile sports. A million dollars will buy you a team in the Continental Basketball Assn. Some AAA baseball clubs can cost $10 million and up. Whatever your startup fees, says stockbroker Jason Klein, who paid about $500,000 for Roller Hockey International's Buffalo Wings, you'll "quickly realize it takes a lot more marketing muscle and resources than you anticipated." This season, he's plunking down $700,000 for expenses.
That's why it's crucial to study a sports team "just as you would any other business opportunity," says Jim Wadley, founder of a food company and co-owner of the Dukes, a Northern League baseball team in Duluth-Superior, Minn. Few teams clear an annual operating profit. Just three of roller hockey's 18 teams were in the black last year. That doesn't mean ownership is always a financial dead end. Teams in a popular league will usually appreciate in value, even if they're not profitable. In 1988, a franchise in the East Coast Hockey League cost about $25,000. Today it's $1.5 million. Even so, unless owning a pro team is your passion, you'll find safer investments elsewhere.
Still game? You can discover what's out there by perusing Franklin Covey's Sports Marketplace ($199; 800 776-7877). You'll want to assess the sport's overall strength, its popularity in a given region, and the durability of other owners. When Jeanie Buss, who manages the Great Western Forum arena in Los Angeles, was deciding whether to bring a roller-hockey team to the city, she was encouraged by the sport's huge growth among teenagers. A veteran of four sports startups, she knew the importance of a long-term fan base. "When these kids grow up, they'll be players and consumers," Buss explains.
It's hard convincing fans they'll love a game they know little about. So it's important to consider a region's tastes before hawking season tickets. In 1996, pro lacrosse came to Charlotte, but lasted just one season in hoops-crazed North Carolina. Such preferences can mean less in areas with fewer live-entertainment options. Boise's Idaho Sneakers have been one of the more durable teams on the World TeamTennis tour, drawing an average of about 2,000 fans a match.
HOT RIVALS. Another factor is the stability of competing owners. Creating hot ticket rivalries if teams are continually moving or going under is tough. So be sure to check out your league-mates. But leagues screen heavily, and those seen as acting on a lark may not go far. When the startup PBL placed newspaper ads, just 4 of the 180 respondents were judged as having real potential.
Once you acquire a franchise, you'll find negotiating the team contracts, arena lease, and media rights "much harder than it looks on paper," says the Buffalo Wings' Klein. But most owners contend they're not in sports to make their fortunes. They'd be happy just to break even.
So says the Dukes' Wadley, who played in college but was never good enough for the majors. After his team won an afternoon contest 4-2, the 60-year-old could only describe his state as "warm and fuzzy." Such are the rewards in real-life fields of dreams.Dennis BermanReturn to top