1973: George Steinbrenner pays $8.8 million for the NY Yankees.
In 1965 sports impresario Sonny Werblin paid $400,000 to sign All American football player Joe Namath to be the New York jets quarterback. – https://en.wikipedia.org/wiki/Sonny_Werblin – My God, when I was a kid Mickey Mantle made around $100,000 per year. In 1966, Sandy Koufax had to hold out in order to get a raise to $120,000 as the highest paid baseball player.
Then along comes some guy named George Steinbrenner, the spoiled rich son of a Tampa based ship builder. In the shot heard round the sports world Steinbrenner paid the insane price of $8.8 million to buy the NY Yankees from CBS. No one could believe it. Hindsight is always 20:20 and George Steinbrenner benefited from the new value that cable TV networks bestowed upon the few sports teams that had cable TV deals. But $8.8 million was less than chump change. Can you imagine what CBS would give to take that deal back?
The Forbes List
Every year Forbes and other periodicals present us with its lists of the most valuable sports franchises. The lists read like the FAANG stocks of sports. The same franchises dominate the list every year. –https://en.wikipedia.org/wiki/Forbes%27_list_of_the_most_valuable_sports_teams – Like clockwork:
1 – The Dallas Cowboys – $4.2 billion
2 – The New York Yankees – $3.7 billion
3 – Manchester United – $3.69 billion
Sports Franchise Price verses Value Dichotomy is Here
Sports franchises have consistently grown in price over the years. As sports teams have expanded around the nation, more cities have been eager to get their names on the map. Sports leagues like the National Hockey League (NHL) grow rich by expanding their games throughout the nation and now the world. In addition, the disproportionate number of super rich billionaires is growing exponentially.
Billionaire David Tepper buys Carolina Panthers for $2.2 billion, “a figure that will set the record for the highest sale price of an NFL team and make it one of the most expensive U.S. professional sports franchises ever purchased. Tepper, a hedge fund founder and currently a minority owner of the Pittsburgh Steelers, is one of 109 billionaires who own the top 140 sports brands”, according to a joint report released in October from money manager UBS and consultancy PricewaterhouseCoopers. – https://www.usatoday.com/story/sports/2018/05/15/carolina-panthers-david-tepper-sale-most-expensive-sports-franchises/610692002/ – Many of us know the flamboyant and successful David Tepper for his lucid stock market forecasts on CNBC.
Sports franchises have not necessarily grown in value. The point is that there is a disproportionate amount of funny money floating around ready to buy sports franchises. Owning a sports franchise has more to do with ego than business. Thus, the price paid for a sports franchise is often times unrelated to the value. A study by NYU shows that it is time to be careful before you think that all sports franchises are in a bull market. In many instances, value is lagging and your city or favorite billionaire may be buying a pig in a poke.
The Watering Down of Sports Competition
I am so happy that Las Vegas lost to Washington in the Stanley Cup finals! You heard me. Las Vegas is no rags to riches story. My favorite sport has been made mediocre by the NHL’s lust to expand as far as the eye can see. As a diehard NY Rangers fan who as a kid saw the original six teams, I am disgusted by the dilution of talent and the salary cap that has ruined the game.
Besides Alex Ovechkin and Marc Andre Fleury, how many people know the players who fought for the Stanley Cup this year? The story line of Alexander the Great winning his first Stanley Cup was the only thing that kept me interested. In my view, NHL commissioner Gary Bettman had better think hard about how far he goes with the expansion and so called democratization of the NHL.
Cheap Thrills of Scoring
We are living in a short attention span video game society. As a consequence, sports leagues have skewed the game towards high scoring events. They do so by changing the rules of the games and the tools that players use. Here are some examples of how sports achievements have been cheapened:
Football Passing – Does anybody other than a millennial really believe that Tom Brady is a better Quarterback than Joe Montana? The rules have changed to make it easier to pass. When Johnny Unitas played, he tossed a fatter football called “The Duke.” The ball was harder to throw and the rules favored the defenders. The ball has changed too. A new sleeker football arrived when the Super Bowl age began. Fans want to see the bomb.
Home Runs have soared in Baseball. Does anybody really believe that players are better at hitting home runs today? Babe Ruth became famous after the ball was changed around 1919. Today the fences have been moved in and the ball goes much further. As a result there are more homeruns jumping out of the park today. Everybody close your eyes and name the top 10 homerun hitters in each league – No cheating. Many of the players’ names are new on the list in the diluted crowd of so called record breakers. Hall of fame pitcher Tom Seaver, keeps a collection of baseballs that he has cut in half going back decades. He says that the evidence does not lie. The balls have changed to have more bounce.
I am not a soccer fan, but it is the only wildly popular low scoring game around the world. I want to know when they will ruin soccer too.
Horse racing records do not change because there is just about nothing that the racing world can do about it. The inbreeding of the thoroubred race horse makes it impossible. Secretariat was a freak and no horse is going to break his speed records. Race tracks have tried to pound down the racing surfaces in order to increase race speeds, but it’s not working.
Sports betting is going to change things in ways that we do not yet know. In the meantime, sports leagues and franchises are thinking hard about how to profit from something that has been considered an anathema to their games. Pete Rose, come on down.
The visit by the Las Vegas Golden Knights should be a warning to the sports industry. Sorry Vegas, but your team just isn’t that good. Rather it is an exemplar of the decline of the underlying value of sports franchises. A watered down product with cheapened standards of greatness is ruining sports. The general devaluation of many franchises is sure to follow.
The more teams there are, the more cheap thrills we get, the less interested we are. Football attendance was going down long before the Colin Kaepernick nonsense came along. If I were a betting man, I would do my homework and look for sports franchises to sell short. Maybe someone in New Jersey could legally arrange the bet.
Full Disclosure: I am a die-hard NY Rangers fan and want Madison Square Garden to outspend everyone with all of its riches in order to win the Stanley Cup.