Why own a pro sports team?
The list of potential buyers for the Dodgers — should Major League Baseball or a divorce court force a sale — features all the usual suspects.
Forbes 400 types who have amassed personal fortunes large enough to afford every sports fan’s dream. That includes men such as Eli Broad and Tom Gores, who do not have much experience when it comes to owning a team.
The scenario sounds familiar to Robert Kraft, who purchased the New England Patriots in 1994 after years of cheering from the stands.
“When I first took over the team,” he recalled, “I was in Disney World every day.”
But even for the savvy businessman, sports can be tricky. Just ask Kraft or Mark Cuban of the Dallas Mavericks or Ted Leonsis of the Washington Capitals, who say they learned a thing or two in their early years as owners.
They discovered that success in the boardroom does not guarantee wins on the field.
“You think you understand it,” Leonsis said. “But until you are in this pressure cooker, you don’t.”
In other words, being an owner isn’t all fun and games.
Under a microscope
None of the people who own Southern California’s biggest teams would agree to be interviewed for this story.
Frank McCourt has been fighting to keep hold of his team since Commissioner Bud Selig assigned a trustee to oversee day-to-day operations last month. This week, ex-wife Jamie McCourt asked a judge to order the immediate sale of the club as part of their divorce settlement.
The Dodgers aren’t the only ones dealing with tough times.
Jerry Buss just watched his Lakers lose early in the playoffs. The same thing happened to Philip Anschutz of the Kings — who rarely grants interviews — and Henry Samueli of the Ducks.
The much-maligned Donald Sterling and his Clippers suffered through yet another losing record and even Arte Moreno’s Angels are off to a sluggish start.
Successful businesspeople venturing into sports often find themselves in a vastly different world. As Kraft put it: “They don’t teach you how to run a professional franchise at Harvard Business School. You have to get knocked around a bit first.”
Control is a big issue. Consider the Walt Disney Co., which carefully manages employees and the environment at its theme parks around the world. When Disney owned the Angels, it was a different story.
There were agents with huge demands and players with big egos who occasionally acted out in ways that did not suit the corporate image. Disney had no way of assuring a happy outcome — a victory — for fans who showed up at the ballpark.
“They had difficulty with something unscripted like a sporting event,” said David Carter, executive director of USC’s Sports Business Institute. “They didn’t quite understand.”
Bad calls and injuries only add to the uncertainty. Sterling, for example, has watched key players such as Blake Griffin, Chris Kaman and Shaun Livingston miss large chunks of playing time in recent seasons.
“At America Online, I never had a human resources person come in and say, ‘Our lead HTML programmer blew his elbow out and can’t go,’” said Leonsis, an Internet entrepreneur. “There’s luck involved.”
Which can provoke anger and frustration to a degree not always associated with other businesses. And millions of people are watching.
Owning a team is like a “roller coaster where your every move is second-guessed and over-analyzed unlike any other industry,” Cuban wrote in an email to The Times.
Some of the scrutiny comes from media. Leonsis said AOL could launch a new product worth millions of dollars and garner only a few paragraphs in the Washington Post, but a regular-season Capitals game gets plastered across the front of the sports section.
Now add fans — in his early days as the Patriots owner, Kraft realized he was dealing with a different sort of customer.
“I’d be at a red light and people would pull up and offer their opinions,” he recalled. “I’m at Dunkin’ Donuts and if they didn’t like a trade, I’d hear about it.”
Under such pressure, otherwise brilliant executives sometimes abandon the principles that made them successful in the first place.
They might spend too much money on players, or not enough. They might be too impatient, switching coaches every other season, or meddle in personnel matters with no real knowledge of the game.
“The less I’ve done,” Leonsis said, “the better record we have.”
Buss has taken a similar approach, closely watching his team and weighing in on major decisions, but just as often trusting his general manager and coaches.
The most successful owners, it seems, find specific ways to transfer their business specialty to sports.
Calling upon his experience in new media, Leonsis blogs and writes on Facebook and answers emails from fans, all of which have boosted his popularity. Similarly, Kraft has succeeded by sticking to his management style.
Early in his tenure, the Patriots lost their well-liked coach, Bill Parcells, to the rival New York Jets and endured three uneven seasons under Pete Carroll. After that, a new combination of Bill Belichick as coach and Scott Pioli as vice president of player personnel mirrored Kraft’s policy of spending wisely.
That meant signing role players who fit the system and not chasing expensive free agents.
“These are the principles that made him successful in business,” said Marc Ganis, president of SportsCorp, a Chicago consulting firm. “He does not deviate from them.”
At USC, Carter believes owners should treat pro sports as a customer service business.
Moreno, with his marketing background, scored an instant hit by lowering ticket and beer prices when he bought the Angels in 2003. Conversely, McCourt took heat for raising prices, and Sterling has been criticized for not spending enough to put a quality team on the floor each night.
Every misstep and controversial decision gets magnified.
“If Frank and Jamie McCourt were simply major real estate developers in Boston, their divorce would be a couple of lines in the business section,” Ganis said. “Owning the Dodgers makes it international news.”
Bundle of reasons
Given the potential for headaches and ridicule, Cuban was asked why anyone would want to buy a pro team.
“I wonder that myself sometimes,” he replied.
But owners say the rewards can be substantial. They speak of civic duty, a notion that traces back to the early days of baseball, when factories sponsored semipro teams for the good of their towns.
“At the end of the day, we hold the psyche of the community in our hands,” Leonsis said. “If we win, everyone is happy.”
There is also the matter of finances. Owners often complain of losing money on daily operations — a claim disputed by players’ unions — but there is no arguing that franchises appreciate in value.
In 1979, Buss paid Jack Kent Cooke $16 million for the Lakers as part of a larger deal that included the Kings, the Forum and property. Last summer, Forbes estimated the team’s worth at $607 million.
Most of all, owning a team can pay off in ways that no other business can.
“You have the Lombardi Trophy, you have the Stanley Cup,” Ganis said. “No one ever cheered for T-bills earning interest.”
And for a competitive businessperson with hundreds of millions to spare, sports offer the ultimate zero-sum game, a winner-take-all scenario that begins anew each season.
“There is no other business like it,” Cuban wrote. “Which is why I love it. Most of the time.”
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