by Evette Brown
With the recent lockouts in two professional sports and other recession-related issues, large media corporations that were once purchasing sports teams for synergy purposes in the past are now opting out.
According to Forbes, the appeal for media corporations such as Comcast, News Corp, and Walt Disney to purchase sports teams to avoid compensating the teams for broadcasting rights is gradually fading. Recently, billionaires with roots in the cities where these teams are located, like Mark Cuban and the Dallas Mavericks, are replacing companies as owners of these franchises.
With Comcast’s purchase of the Philadelphia 76ers; News Corp’s acquisition of the Los Angeles Dodgers; and Walt Disney’s securement of both the Anaheim Ducks and the Anaheim Angels, it appeared as if the media world had a vested interested in owning franchises in all of the professional sports leagues.
However, as quickly as these media companies invested in sports, they have withdrawn their offers by selling all of the above teams to individual owners. What is prompting this sudden decision to forego team ownership in exchange for paying the broadcasting rights that the corporations were avoiding to begin with?
According to Scott Milleisen, a top sports banker for JP Morgan Chase Private Banking, selling these teams is an admittance of financial defeat. “Local ownership is very important in sports,” he told Forbes. “If you just inject a CEO who doesn’t invest in the community, it makes it very hard for them to be successful.” With the News Corp. owned Los Angeles Dodgers filing bankruptcy, Milleisen is directly on target with his presumption. These media corporations are withdrawing their troops from the sports arenas and focusing them on what is most important: media.