SBJ/19980629/This Weeks Issue

Corporations with big guns have individual owners on endangered list

Once upon a time, not all that long ago, pro sports teams were little more than mom-and-pop outfits.

From George Halas to Bill Bidwell, from Connie Mack to Peter O’Malley, from Walter Brown to Ross Perot Jr., the blueprint called for a local owner to call the shots, take the blame and bask in reflected glory. The NFL still insists upon one team, one owner. As for the rest of professional team sports, business is going to the big boys.

Of the 85 teams in the NHL, NBA and Major League Baseball, 19 – or 22 percent – are either owned publicly or controlled by a corporation. In fact, though most are in a minority capacity, 67 corporations have ownership ties to major league teams. They include big ones, like media giants Walt Disney, Time Warner and Fox, as well as smaller ones, like beer brewer Wirtz and pizza-maker Little Caesars.

The reason is twofold, analysts say.

First, fewer entrepreneurs can afford the risks that come with owning a major sports franchise.

“The stakes are much higher now than even a few years ago,” said Cathy Griffin, a vice president with the sports practice for headhunter A.T. Kearney’s Executive Search. “If you are an individual or a family with a lot of wealth, are you going to take those risks? More and more often, those individuals and those families are saying, ‘Not with my money.’”

As for corporations, they are after control.

For a company like beer manufacturer Interbrew S.A., the idea is to maintain continuity between the identities of the product and the team. By owning the Toronto Blue Jays, Interbrew doesn’t have to compete with other brewers every three to five years for that relationship.

Corporations are for now denied entrance to the NFL’s ownership ranks, but Disney hopes to entice the league to drop its ban and award Disney a franchise in Los Angeles, which has been abandoned by both the Rams and the Raiders in recent years.

“The history of Los Angeles tells us there are no private pools of money coming up to buy an NFL team there,” said Paul Anderson, assistant director of Marquette University’s National Sports Law Institute. “If there’s one group that wants to bring pro football back to L.A. and can afford it, it’s Disney. The NFL will have to find a way to deal with that fact.”

Why does the NFL hesitate? Because the league wants its franchises to be the No. 1 priorities in a single owner’s portfolio, not mere pawns in a corporate chess game between shareholders and executives.

The league has every right to worry, some experts say.

“It could be harder for Time Warner to make decisions on trading players or signing free agents,” said Rick Burton, director of the Warsaw Sports Marketing Center at the University of Oregon. “A corporation may be less willing in the long run to let the sports people run the teams.”

On the other hand, corporations do bring the means to weather the bad times that can hit any pro sports team.

“They’re somewhat more insulated from short-term financial conditions that can sometimes force individual owners to suddenly reverse strategies or to move the team,” said Joseph L. Bast, president of Chicago-based The Heartland Institute, a nonprofit public research organization advocating free-market policies.

“While the fans aren’t always right and relocation isn’t always wrong, in the long run corporate ownership is beneficial to the teams and to the sports.”

Nonetheless, there remains the unanswered, long-term question: Will a corporation hang onto a sports team that is losing money?

“Corporations are less willing to tolerate losses,” Burton said. “Shareholders aren’t likely to put up with a subsidiary that’s underperforming, even if it is the Mighty Ducks.”

Rusty Cawley writes for the Dallas Business Journal.

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