New Owner Thoughts Part 2: Ownership Stability


Credit: sulekha.com - Note that none of these guys are around anymore. This was from 2 years ago.

Team ownership can be a very rewarding experience. Take someone like John Henry, the owner of the Boston Red Sox, for example. Henry leveraged his ownership of the Red Sox into creating a television network in New England (NESN), as well as part-ownership of what is now called Roush-Fenway Racing (a top NASCAR team) and the Liverpool soccer team in the EPL.

Unfortunately, John Henry is the only example of major success that came to my mind. Team ownership can also be a huge disaster, and many more of these exist than success stories. Tom Hicks owned a team in nearly every sport and league under the sun, then sold them all because he went bankrupt. The former ownership group of the Atlanta Hawks, Atlanta Spirit, had nasty infighting which resulted in a hamstrung on-court product. The Wilpons, owners of the Mets (in the country’s largest market), got caught up in Bernie Madoff’s Ponzi scheme, their future under current ownership unclear. The McCourts’ divorce mess has been so extensive and disastrous that it has a website devoted to it. Donald Sterling still holds the Clippers hostage. The New Orleans Hornets are owned by the NBA because their previous owner couldn’t afford them anymore. The NHL’s Phoenix Coyotes went bankrupt – the bankruptcy even has a Wikipedia page. NASCAR’s Richard Petty Motorsports sat on the brink of financial collapse for months – heck, they stopped paying their drivers, insisting that they race at the highest level for free.

Simply put, team ownership contains risk, and many people, usually not the owners themselves, pay for it.

The Sixers had owners that, to the public, were rarely seen with the team. While Ed Snider repeatedly professed his love for the Sixers, he and the rest of the Comcast-Spectacor leadership could rarely be found with the team. Public perception was always “Flyers first.” But as I’ve said in the past, C-S provided much of what you would want in a team’s ownership. They weren’t in the news – the team wasn’t going bankrupt, because it had Comcast money behind it. There weren’t any ownership distractions, except for the sale rumors.

The problem for the old group wasn’t the lack of trying. They spent millions, even into the luxury tax, on losing teams. Last season, the Sixers spent against the luxury tax line for a .500 team. They’ve cycled through 10 coaches in the last 15 years, paying 3 at a time on multiple occasions. Comcast-Spectacor, for the lack of a better phrase, failed to understand what it took to compete in the NBA – that was the problem. C-S failed to hire competent coaching and front-office personnel on more than one occasion. Billy King and Ed Stefanski proved to be poor hires. Eddie Jordan, Randy Ayers, and Jim O’Brien couldn’t be ushered out the door quickly enough. Sam Dalembert’s contract just ended!

The old ownership group represented stability, however. C-S has huge financial backing and the ability to take losses. But as we know, the losses became too great for them to keep the team.

Which brings me to the new group. I get the impression that this group has a plan for making the Sixers a better franchise. They have already taken steps to make the team marketable to fans and the city in general. Lower prices will usually create a buzz. This should help them succeed, and that’s what I talked about yesterday.

But I must ask: is this a stable ownership group?

Every investment in the group is personal – while Harris is the CEO of Apollo Management, the investment is his. His personal funds. The rest of the group has the same situation – their investments are personal. Unlike Comcast, which can absorb a small loss (with the dollars they dabble in every day, that is), these owners will personally lose value if the franchise operates in the red. While the psychic benefits involved with team ownership can also come into play, they don’t replace that worth. As a billionaire, Harris has money to spend. But he also has the highest percentage to lose. I cannot imagine that this group would be willing to lose as much as Comcast apparently has already, because it is a personal investment. And the owners wouldn’t have made it if they didn’t want to make a profit.

What might we see, then? Well, no one knows. But this ownership group undoubtedly has more to lose than Comcast from mismanagement, which can be a strong motivation to make things work or a detriment when things go poorly.

Tags: Ed Snider Joshua Harris New Ownership New Ownership Thoughts