Should pro sports teams be owned by corporations?
The private versus corporate debate in professional sports.
You don't have to be much of a fan to figure out that there is some epic dysfunction going on in the business of sport.
More specifically, the upheaval caused by capricious team owners has heightened professional sports' financial volatility, bolstering the argument that the option of corporate ownership is the best option for the future -- even the National Football League where corporate ownership is prohibited.
After all, every other business has had to shift a paradigm or two, re-think strategy and competitive advantage -- why not sports?
The top brass in various leagues, like Bud Selig, commissioner of Major League Baseball, have long favoured private, local ownership based on the conviction that it makes for accountable, responsible management.
But Selig's battle with Frank McCourt, owner of the bankrupt LA Dodgers, will almost certainly put that to the test. And it should make Selig and other executives conclude that the financial and competitive balance of corporate owners would be better for long-term sustainability.
Currently in baseball, only four teams are corporate-owned: the Atlanta Braves (Liberty), the Chicago Cubs (Tribune Co.), the Seattle Mariners (Nintendo) and the Toronto Blue Jays (Rogers Communications). The knock on them is that they run teams for profit rather than for winning and that the investment required to recruit top talent won't be made.
Given what McCourt ownership has done to the LA Dodgers (who have just filed for Chapter 11 bankruptcy protection after their owner and his ex-wife pillaged the coffers) and the disparaging remarks made recently about over-paid players by Fred Wilpon, owner of the New York Mets, the private-ownership rationale is being tested.
If that's not sufficiently compelling, there's the strategy deployed by the Florida Marlins and the Tampa Bay Devil Rays -- both privately owned. Several years ago, they deliberately slashed their payrolls to collect League revenue sharing funds and increase their profit margin.
Another point worth pondering is that spending big bucks -- in sports or in any other business -- doesn't guarantee a win.
The National Football League may not allow corporate ownership but as the ongoing lockout of players demonstrates, 32 private owners of varying size and wealth can be problematic.
Within the NFL family, it's clear that smaller-market owners (who have much thinner profit margins) are pitted against the deep pockets of guys like Jerry Jones, owner of the Dallas Cowboys and Daniel Snyder, owner of the Washington Redskins. (Both have an operating profit of over $100 million.)
The owners with less capital are resisting a proposal that every franchise must spend 100 per cent of the maximum salary cap. It's an issue that's already surfaced in baseball, where big-spenders like Yankee or Red Sox owners complain that lower-revenue teams benefit from revenue sharing from the bigger operations, but don't fully re-invest it in the "product."
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