James’ First Taste of Pro Sports Ownership a Success. Is NBA Ownership Next?

LeBron Liverpool

Back in 2011, LeBron James spent $6.5 million to acquire a 2% stake in Liverpool F.C. – his first foray into team ownership. Liverpool’s return to prominence on the pitch and a significant increase in the value of domestic English Premier League (EPL) media rights (+70% from the deal that expired in ‘15) have driven the value of the soccer club upwards since. By 2018, it was being reported that the James’ shares were worth $32 million and The Action Network’s Darren Rovell reported that he “could easily sell that piece for $45 million” now that The Reds have claimed the ’19 Champions League title.

Minority interest in the EPL club has given James a taste of pro sports ownership and according to business partner Maverick Carter, LeBron envisions a day when “he’ll be owning a [NBA] basketball team and running it.” James was a bit more reserved on his future plans (at least during all-star weekend) saying “I believe if I wanted to, I could own a team or be part of a basketball team [ownership group]”; before throwing out the contingency, “it’s not like it’s a dream of mine. It’s more of an aspiration. We’ll see what happens.”

Howie Long-Short: Elite athletes (see: Shaq, Magic, Serena) have been acquiring minority interests in big four pro sports teams for years, but few have publicly expressed (nevermind pursued) James’ ambition to serve as the controlling owner. Should LBJ pull it off, he would become only the 3rd pro athlete turned controlling owner across all 123 NBA, NFL, MLB & NHL teams (see: Michael Jordan and Mario Lemieux).

The valuations of big four sports teams have gotten so high that it’s difficult to envision any current athlete becoming the next M.J. Jordan received a particularly favorable deal at a time when the NBA was going through “one of its most bleak economic periods” (i.e. following his 2nd retirement). The Bobcats (now Hornets) were valued at just $275 million and Jordan was only required to put up $30 million in cash (the rest was an assumption of debt). There’s little chance the league would approve a transaction of that nature today.

Forbes claims that the average NBA franchise is worth $1.9 billion and with NBA bylaws requiring a controlling owner to maintain at least a 15% stake ($285 million) in the franchise, James is going to have to write a sizable check if he wants to lead an ownership group. Stuart Goldfarb (a corporate attorney who has worked with both groups/individuals interested in acquiring and selling teams) suggests that it’s unlikely James would ever have enough capital to buy a team outright (his net worth is estimated at $450 million), but believes he is among a handful of athletes that could find sufficient backing to front an investment group. An international star like LeBron brings intangibles (think: notoriety, relationships and introductions) that can further a group’s interests – and bid for the franchise – beyond just cash.

While it’s difficult to envision a current athlete acquiring a big four sports team without some additional financial backing, MLS clubs could be a possibility. The teams currently sell for between $200 million and $250 million and with a handful of players in Europe and South America earning more than that on their current contracts, it seems feasible that they could one day follow in David Beckham’s steps and own an American pro sports franchise. Goldfarb believes there’s tremendous value in investing in the sport of soccer – particularly if you look abroad. “There are first division teams in Europe (see: French, Spanish, Italian and Portuguese Leagues) where the teams are a fraction of the cost and the media rights deals are exponentially larger.” He also cited minor league baseball as another attractive investment option for retired athletes.

Fan Marino: If James wants to own an NBA club, he may have to settle for one outside of Cleveland – there’s no indication the Cavs will be up for sale anytime soon. James claims that “it’d have to be the right city” [for him to pursue ownership], but Goldfarb can’t imagine he passes on an opportunity if he really wants to own a team. With just 30 NBA franchises, chances to join “the club” don’t come along often. He added “James is bigger than any one jurisdiction, anyway. He would develop ties in a new community.

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Author: John Wall Street

At the intersection of sports & finance.

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