As the next step in the public punishment of Los Angeles Clippers owner Donald T. Sterling, the NBA says it’s going to try to force him to sell his team. But this isn’t exactly a fire sale.
The traditional profit-focused reasons for buying a sports franchise are well established says Michael Leeds, a sports economist at Temple University. “I mean, you can go back to the 19th century,” he says. “People would buy baseball teams because they owned a tavern nearby and they wanted to sell their beer.”
Nowadays, Leeds notes, owners are more likely to buy shares in media networks, but he says the payoff for ownership can come in different forms.
“When you own a sports franchise, you join a very exclusive club,” he says. “As George Steinbrenner once said, ‘Before I bought the Yankees, I was just some ship builder in Tampa.’”
Leeds says there’s a rush that comes with seeing your name in the paper, and some buyers are willing to pay a premium for that. Celebrities from David Geffen to Oprah Winfrey are reported to be interested in buying the Clippers. And all that buzz can drive prices up. While Donald Sterling bought the Clippers for only $12 million dollars more than 30 years ago, one currenet estimate is $575 million.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.