SBJ/19980629/This Weeks Issue

Going public

A STREET & SMITH'S SPORTSBUSINESS JOURNAL SURVEY OF MAJOR LEAGUE TEAMS AND THE POSSIBILITY OF THEM GOING PUBLIC.

THE PROCESS:
The top financial executives of NBA, NHL and Major League Baseball teams were contacted. The NFL does not allow public ownership, so it was not included in the survey. Teams that already are publicly owned or controlled by a corporation also were excluded from the survey.

ANALYSIS:
The results indicate that nearly 20 percent of the privately owned teams among the three leagues are considering or have considered an initial public offering. Baseball franchises lead the way, with 36 percent of those contacted saying they are considering an IPO. In hockey the number drops to 15 percent, while in the NBA only one team – or just 5 percent – has considered going public.

The numbers show that the financial and labor turmoil Major League baseball endured during the past decade has teams thinking more about initial public offerings than the other two leagues. Also, last summer Major League Baseball relaxed its rules to allow public ownership, indicating many of its owners wanted the option.
NHL teams, which are facing surging player salaries, are starting to consider IPOs more and more. For the NBA, which has enjoyed spectacular growth for more than a decade and is now just beginning to confront issues of unprofitability and labor woes, the issue is not yet on the radar screen.
 
Major League Baseball NBA NHL Total
No. of teams 30 29 26 85
No. with ties to public ownership 5 6 8 19
No. of teams contacted 25 23 18 66
No. that responded 21 20 12 53
No. that have considered an IPO 9 1 3 13
If yes, has the emergence of
companies like Time Warner and
News Corp. had an influence on
your thinking?
3 1 1 5
If you have considered an IPO,
will your decision be made in six
to 12 months?
1 0 2 3
If you did an IPO, would the
proceeds be used for*:
a) player salaries 2    NA 2 4
b) debt retirement 4    NA 2 6
c) stadium improvements 2    NA 1 3
d) other 2    NA 1 3
* Some teams gave multiple answers.
NA -- not applicable.
Source: Street & Smiths SportsBusiness Journal.
       

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