Is owning a sports team an investment or a hobby?

By: ispeculatornew
Date posted: 12.31.2008 (4:00 am) | Write a Comment  (3 Comments)

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I’ll just give you my opinion as I don’t think there is a black or white answer to this question, but what got me thinking is the recent decision by Honda to let go of its much praised Formula racing team.

It was purchased by the world’s second richest man, Carlos Slim. On the surface, this is what it looks like to me. Owning a sports team is a lot more a hobby than anything else. Honda has said it would save over $300 millions. Now sure, winning had the potential of perhaps brand enhancement and maybe indirect sales but $300 millions? Was it perhaps nothing more than a little toy?

How about baseball teams like the New York Yankees or the Montreal Canadiens? In good years, they are able to bring in a profit of course. But they also have tougher times and it seems difficult to imagine that the reason they are in the business is to make money. Pro teams often are more about the passion of a specific owner than anything else. Does it just so happen that once an owner makes so much money in a business, he is ready to enter a business for the simple reason of having an extra adrenaline knowing that his team is playing for the highest awards possible?

Some of the most famous teams are currently for sale as their owners struggle with the finances. The Chicago Cubs, perhaps one of the 5 most famous sports teams has been for sale for a few months now but has not received any serious offers. If it was a wise business decision, you’d think that even in the current environment there would be some good offers.

Of course, there have been some great stories as well. The NY Yankees for example were purchased by George Steinbrenner for $10 millions in 1973 but are now worth $1 billion according to Forbes magazine, a brilliant investment no matter by what measure.

What is your opinion about all of this?

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3 Comments

  1. Comment by Mark — January 1, 2009 @ 4:23 pm

    Owning a sports teams seems like a hobby. It is a status symbol for millionaires and billionaires. Owners do seek to make a profit but most seem unconcerned with spending massive amounts of money on luxury taxes ie…Yankees, Mavs, Knicks

  2. Comment by Money Beagle — January 11, 2009 @ 3:18 pm

    I think in a lot of ways, when you get that rich, it really doesn’t make a difference to the owner. It’s seen as a ‘status symbol’ once having the top floor penthouse and the personal airplanes aren’t enough.

  3. Pingback by Money Hacks Carnival #47 | Money Beagle — January 14, 2009 @ 6:24 am

    […] Is owning a sports team an investment or a hobby? posted at Intelligent Speculator […]

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