By Sonya Kimble-Ellis
Sports investing has proven to be for a wealthy and chosen few. It has been four years since an NBA team was up for sale. But so far, 2010 has seen both the Charlotte Bobcats and the New Jersey Nets placed on the auction block. “Of the ninety or so teams in Major League Baseball, the NBA and NFL, only a small number of them would be for sale or available for transactions,” said George Postolos, president and CEO of The Postolos Group LP, a sports investment and advisory firm in Houston. Franchise owners, he says, tend to hold onto their teams for a very long time.
That wasn’t the case with Bob Johnson, founder of Black Entertainment Television. He purchased the Charlotte Bobcats six years ago, making him the first African-American majority owner of a professional sports team. After purchasing the team for $300 million, he reportedly lost upwards of $30 million per season as the franchise had difficulty finding sponsorships and filling arena seats.
Reflecting on the challenge Johnson faced, Andre Farr, chairman and CEO of the Black Sports Agents Association (BSAA), said, “Some investments just take a long time to mature, and to start a new NBA team in a city that didn’t have a team beforehand is a difficult task.” Farr added that making a team profitable takes top tier investors, coaching staff, executives and marketing personnel. “It’s not just the players,” he said. “When it works, it works. The New York Yankees are a good example of that.”
Seeing his fortunes decline, Johnson began looking for buyers some six months ago. In the running to purchase the franchise was Michael Jordan, who had been a minority investor since 2006, yet who had played a major role in team decisions both on and off the court. Jordan’s experience also includes working as president of operations for the Washington Wizards, during which time they won six championships. Also making a play for the Bobcats was Postolos, who had previously served as president of the Houston Rockets for eight seasons. He declined to go into detail about his role in Jordan’s recent acquisition of the Bobcats.
On March 17th of this year Jordan, having received unanimous approval from the NBA’s Board of Governors, finalized his purchase of a controlling interest in the team. The purchase was done under the auspices of MJ Basketball Holdings LCC, a group of investors organized by Jordan himself. Insiders place the value of the deal at $240 million dollars. Reportedly $160 million of that will cover the team’s debt, while $80 million will be used for expected losses for this season and the next.
