The Complexity of NBA Franchises
One characteristic of modern pro sports which sometimes fails to attract attention in the spotlight of intense media coverage concerns the complexity of transferring team franchises from one owner to another. Today the extensive protocols surrounding this process rival many stock market IPOs. In addition to weighty documentation requirements, the heady price tags surrounding the sale of a successful sports team may restrict the number of available potential buyers. In fact, increasingly the purchasers of these valuable assets consist of groups of wealthy investors. A millionaire acting alone could not afford to own some valuable professional teams.
One illustration of the sophistication of sports franchise transfers occurs with respect to the National Basketball Association. Some sports commentators believe that the NBA’s successful conclusion of negotiations for the televised coverage of games significantly increased the value of individual team franchises. Just as Hollywood film star salaries soared a few decades ago following generous increases in residuals, today the lucrative nature of media coverage of sports events promises to send a wave of new prosperity through the ranks of professional basketball.
The Sale of the Los Angeles Clippers
To appreciate the full complexity of inflating franchise prices, one need only consider a few examples. For instance, last year the sale of the Los Angeles Clippers produced record prices (and that transaction occurred before the finalization of the most recent TV coverage agreement). Steve Ballmer led an investment group which submitted the successful offer.
And The Atlanta Hawks
In April, ESPN writer Kevin Arnovitz reported that the Atlanta Hawks franchise owned by an investment group headed by Bruce Levenson would sell for some $850 million to a group of purchasers including entrepreneur Antony Ressler. Mr Ressler, a successful real estate developer and the owner of a private equity firm, previously participated in an investment group which purchased the Milwaukee Brewers in 2005. In order to acquire the Atlanta Hawks, he helped form a team of buyers.
Bruce Levenson on wikipedia and several other investors purchased the Atlanta Hawks a few years ago. They also acquired rights to operate Philips Arena, where the team plays many games. It seems likely that the complexity of closing a transaction for the sale of their NBA franchise will require weeks or months to finalize. With voluminous paperwork involved in the sale of any professional team, plus the added complication of meeting any requirements established by the NBA and the Philips Arena itself, probably no franchise deal takes place rapidly in any modern setting.
Perhaps at some point in the future, an expert will devise a way to streamline the process of selling and buying professional sports franchises? That situation would likely please the NBA, owners, buyers and team members alike. How ironic that such a fast-paced game today often hinges around very slow moving behind the scenes formalities.