SBD/9/Sports Industrialists


     This week, THE SPORTS BUSINESS DAILY interviewed PAUL MUCH,
a Senior Managing Director with the Chicago investment banking
firm of Houlihan Lokey Howard & Zukin.  His firm recently co-
published, with TEAM MARKETING REPORT, the 1995 edition of
"Inside The Ownership of Professional Sports Teams."  Much
specializes in the valuation of business and their securities. In
the area of sports, he has advised clients on financial issues
involving more than three dozen teams.  Excerpts from our
conversation follow:
     THE DAILY:  Tell us about the findings in your book.
     MUCH:  What you will find is that the business of sports is
the business of entertainment.  When you look at the corporate
ownership of professional sports teams, there are over 40 public
companies that have a piece of sports teams -- either controlling
interest or a minority interest.  And of those, 2/3 of the
companies are -- either primarily or as a secondary business --
involved in entertainment. ... When you look at the entertainment
business, specifically those companies that see sports as one
part of their entertainment portfolio, you will see a synergistic
benefit that will be an enhancement in franchise value.
     THE DAILY:  What is helping the growth of franchise values?
     MUCH:  There are two factors driving the expansion in
franchise values. ... Currently, what you're seeing is an
enhancement in franchise value principally as a result of stadium
economics. ... and that will continue for the next few years.
But, the long term increase on franchise value will come from
synergy with corporate America.  And that's really the theme of
our book.
     THE DAILY:  If there is a strong corporate presence moving
into the sports industry now, what type of effect will that have
on teams and leagues?
     MUCH:  It's a two-fold benefit.  Number one, it's providing
another communications link to be able to provide the consumer
with the entertainment they want.  Secondly, it's allowing the
team to enhance it's revenue base to be able to compete more
effectively for players.  No matter what league you look at, the
players take more than 50% of the total revenue pie -- and that's
been growing over time. ... What you see is players' salaries
growing faster than revenues, and the team owners have to find
additional revenue sources ... where they are able to continue to
compete for playing talent.
     THE DAILY:  What other industries will get into sports?
     MUCH:  Ultimately, I do see consumer products companies
moving into team ownership.  So far, what you've seen is
entertainment media because you can see a direct link there. ...
But you will see more and more of a movement.  What better source
of advertising for a consumer products company -- Coca-Cola or
Dial, for example -- than to be able to see the company name on
the team name.
     THE DAILY:  What is the future of the NFL's cross-ownership
rule?  Can the league afford to ignore some of the high finances
from corporate America?
     MUCH:  You have two issues.  One is the corporate ownership
prohibition and the other one is the cross ownership prohibition.
Both of those will change gradually. ... There are too many
economic incentives to ignore.  And they're not ignoring it, it's
just a matter of how do they do it and do it the right way. ...
What you're going to find is a gradual lifting of both of those
bans.  You may even start to see it where there is a joint
venture ownership structure in NFL real estate related
transactions.  For example, you might see corporate sponsorship
or partnership in some type of NFL stadium entertainment complex.
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