What’s Ballmer buying? An ‘expensive plaything’

Mark Garrison May 30, 2014
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What’s Ballmer buying? An ‘expensive plaything’

Mark Garrison May 30, 2014
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Former Microsoft CEO Steve Ballmer is buying the LA Clippers for $2 billion. It’s a record-breaking sum if the deal goes through, though for Ballmer, it’s fairly small compared to his estimated $20 billion fortune. For his money, he’ll get a team that’s poised to greatly increase its TV revenues and the thanks of fans grateful to be rid of Donald Sterling, disgraced after his infamous racist rant. But above all, he’s getting a remarkably expensive plaything.

“He’s not getting a sound economic investment. He’s buying a big toy,” says Andy Zimbalist, a sports economist at Smith College. “It’s a vanity purchase. He gets a lot of exposure, ego massaging.”

$2 billion is more than what most analysts think the team is worth, with some valuing it at a quarter of that price. But in the bonkers world of sports business, all that matters is what one super-rich person will pay.

Regardless of what the team’s true value is, Ballmer will almost certainly benefit from a far richer TV contract when the current one expires. Some estimate the Clippers next deal could triple what they’re making now.

“All of the big deals that we’ve seen in recent times that are really startling have been fueled by the money that’s coming in from freshly negotiated or to-be negotiated TV contracts,” says Clemson University sports economist Skip Sauer.

After all, another LA team, baseball’s Dodgers, sold for $2.1 billion. The new owners went on to sell the media rights for billions more in a 25-year agreement. But of course, the Clippers are far less popular and successful than the Dodgers. Trying to change that could soon be Ballmer’s problem.

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