How Do You Purchase a Sports Franchise?
Whether it's a minor league baseball team or an NBA team, the investment potential for a sports franchise can be significant. According to ESPN.com, Chris Cohan bought the Golden State Warriors of the NBA in January 1995 for about $119 million. Cohan sold the Golden State Warriors in July 2010 for $450 million to set a new record for the sale of an NBA franchise. Although revenue comes in from ticket and merchandise sales, players' salaries must be paid---and when dealing with professional athletes, those salaries can be substantial.
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Instructions
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Decide on which sport and league you are interested in owning a sports franchise in and ensure you meet the financial requirements. Each league will have its own financial requirements that an owner must meet in order to purchase a franchise. When dealing with the five major U.S. sports leagues, Boston Magazine reported that in 2006, a potential owner needed a net worth of approximately $250 million dollars to meet the financial requirement for purchase.
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Find an available franchise for sale. Not all sports franchises announce publicly that they are for sale or are considering a sale. Some potential owners hire a consulting firm to find available franchises. These firms network with teams and the professional leagues and have access to information the general public does not.
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Evaluate all revenue streams that the franchise has available to it, such as sponsorships, advertisers, concessions and media contracts.
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Calculate the franchise's expenses, which include the salaries of players, coaches and general staff, and any lease agreement for the stadium/arena the franchise practices and plays its home games in.
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Place an offer or bid on the franchise. An offer or bid can be placed by the potential owner's consulting team or their lawyer. The current owner of the franchise will accept or decline the proposed offer or accept the highest bid if the sale of the franchise was announced publicly. A due date for all bids will be put in place if the sale is open to the public.
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Gain approval from the league the team is a part of once the offer or bid has been accepted. Generally, the owners within the league will vote on a potential owner, and a league-mandated amount of approval votes by the owners is required for final sale. If the potential owner receives the required amount of votes, their purchase becomes official and they are considered the new owner of that sports franchise.
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References
- Photo Credit stadium in cincinnati image by Ritu Jethani from Fotolia.com
