Donald Sterling (and his lawyer) swears he isn’t selling his beloved Los Angeles Clippers to former Microsoft (MSFT) exec Steve Ballmer for $2 billion. But if a deal’s eventually worked out, Sterling and wife Shelly will have achieved an annualized total return of more than 15% over the past 33 years. That’s Warren Buffett-type returns.
Sports is big business these days. Once upon a time a billion dollars was a big deal. As far as I’m aware, Malcolm Glazer’s $1.5 billion purchase of Manchester United (MANU) in 2005 was the first professional sports franchise to sell for more than a billion dollars. Since then, a handful of soccer teams along with the Cleveland Browns and the Los Angeles Dodgers have been the recipients of billion-dollar deals.
It’s the price of admission today; Steve Ballmer and Donald Sterling know it.
So who are the best Wall Street Sports Owners? To qualify they must have a definitive connection to at least one or more publicly traded companies. Here are my three picks.
The Third-Best Wall Street Sports Owner
I’m tempted to pick John Malone’s Liberty Media (LMCA) simply because he’s a brilliant investor. However, my third pick for best sports owner reluctantly goes to Rogers Communications (RCI), who in addition to all of their cable and media assets, owns 100% of the Toronto Blue Jays and 50% of partnership that controls Maple Leaf Sports & Entertainment (MLSE), the owners of both the Toronto Raptors and the long suffering Toronto Maple Leafs.
As any Montreal Canadiens’ fan can attest, the Maple Leafs are some of the most die hard (if slightly unstable) sports fans anywhere. It’s been 47 years since the Maple Leafs won the Stanley Cup; a prime reason for the hiring of Tim Leiweke last April as the team’s CEO. A very colorful speaker, Leiweke has been a busy man over the last 12 months as his moves to remake the basketball and soccer franchises have paid immediate dividends. Hockey is soon to follow.
The old owners of MLSE — Ontario Teachers’ Pension Fund — were only interested in dollars and cents. The new sports owners are far more concerned about championships and this year’s playoff appearance by the Raptors is a hopeful sign that good things will continue to come Toronto’s way.
In the meantime, shareholders of Rogers can take solace in the fact the Maple Leafs’ value increased by $887 million over the past decade, the ninth-best showing by a North American professional sports team. As sports owners I think they’ll be much better to fans than the pension fund ever was.
Now if it could only figure out how to deliver customer service to Canadians that wasn’t painfully bad, shareholders would be in a much better position. Believe me, the Maple Leafs are the least of their concerns.
The Second-Best Wall Street Sports Owner
Passing away May 28 at the age of 85, Malcolm Glazer and his family own the Tampa Bay Buccaneers of the NFL as well as controlling 90% of the voting shares in Manchester United, arguably the world’s most valuable sports franchise.
With one Super Bowl championship (2003) and five English Premier League titles under their belt, it’s hard to question the Glazer’s success as sports owners.
Although the titles are impressive, Glazer’s crowning glory when it comes to Wall Street is its 2012 IPO on the New York Stock Exchange. Raising $233 million in the offering — the most by a sports team in any league — brought “football,” as they call it across the pond, to American investors.
Although MANU stock has appreciated marginally in the two years it’s been a public company, its latest season was truly unforgettable and Wall Street has downgraded its stock. I do believe the new normal for the selling prices of sports teams ensures its shares continue to head in the right direction. Down 3% over the past 52 weeks compared to 17.7% for the S&P 500, any improvement next year on the pitch will most certainly see a big move in the stock.
As value buys go, this might be it.
The Best Wall Street Sports Owner
This distinction goes to James Dolan, executive chairman of Madison Square Garden Company (MSG) and CEO of Cablevision (CVC), the company that made the Dolan family billionaires. MSG owns the arena that bears its name, the New York Rangers, the New York Knicks and many other media-related assets.
With the Rangers moving on to the Stanley Cup Final combined with the most recent Clipper news, MSG is about to get a whole lot more valuable. Consider that Forbes pegs the Rangers value at $850 million making it the second most valuable team in the NHL behind only the Toronto Maple Leafs, that Forbes suggests is worth $1.2 billion.
TheStreet.com makes the argument that the Knicks could be worth anywhere from $4.3 billion (based on revenue) to $12.8 billion (based on operating income) using the same multiples for the Ballmer deal. Applying similar multiples to the Rangers and you have a team value anywhere between $2 billion and $3.6 billion.
At the low end of the Clipper valuation, MSGs two teams are theoretically worth $6.3 billion, 50% higher than its current market cap of $4.2 billion. Clearly MSG shareholders are ecstatic about their situation. And it just keeps getting better. According to Business Insider the Knicks have seen their value increase by $1 billion over the past decade, the fifth best of all North American sports teams while the Rangers have seem a more modest $578 million increase putting it 23rd.
Can there be any doubt who is the best Wall Street sports owner? Not a chance.
As of this writing, Will Ashworth did not own a position in any of the aforementioned securities.