How to Buy a Sports Franchise

The start of the New Year brings the NFL playoffs as well as baseball's spring training. Then comes the start of the NBA and NHL playoff season. Let's face it, professional sports are America's pastime. Sports fans swarm to team shops to purchase jerseys and other items that bear their favorite team's logo. It is obvious that a large sum of money can be made in the professional sports industry, which makes owning a sports franchise a very profitable venture. Read on for some guidelines to follow before entertaining the idea of purchasing a sports franchise.

Instructions

Difficulty: Easy

How to Buy a Sports Franchise

1. You should not purchase a franchise that you are passionate about. Your judgment will become clouded when management decisions are needed to put together a winning team on the field.
2. Research the market base of the franchise. Is the fan base solid? How many season tickets are sold on a yearly basis? How many competing pro franchises are located in your surrounding area?
3. Understand the limitations of ownership within the various professional sports leagues. For example, the NFL does not allow publicly traded corporations the right to own franchises and they also restrict ownership of a different professional sport franchise in another NFL city.
4. Inquire about the financial state of the franchise. Has the previous owner turned a profit? What are the length of the player's contracts? How much debt is associated with the franchise?
5. Investigate the amount of professional talent produced by the current front office team. You will need to find out how well the scouting department evaluates talent and converts their draft choices into production on the field. Obtaining talent give fans a reason to spend money to see your franchise.
6. Research the pulse of the fan base. How well does the team's merchandise sell? What type of television and radio deals are in place? What type of advertising is currently being executed? These type of questions need to be answered before making an offer. Not every sports franchise can be transformed into a profitable situation.
7. Evaluate the cost of the fees for an exchange of ownership within various professional sports leagues. You will need to provide financial records to show whether or not you have the resources to acquire a franchise. Your personal net worth must be in the range of 200-300 million dollars to be considered a professional team owner. And plan to spend a minimum of 20 million dollars for a league to conduct a background check investigation prior to your ownership bid being approved.
8. You will need to consult with a lawyer that specializes in sports management. They will negotiate a selling price for the franchise you are interested in purchasing.