Jordan’s Purchase of The Bobcats Illuminates the What’s What of Sports Investing
I plan to make this franchise an organization that Charlotte can be proud of,” Jordan told reporters recently, “and I am committed to doing all that I can to achieve this goal. . . .I plan to be very hands-on with this business. For me there’s a personal dimension to owning this team. I’m doing this because Carolina is, and always has been, home for me, and basketball is my main business. I’m also the first player to become the principal owner of a team, and that gives me a different perspective on ownership than anyone else in the league.”
“While what Jordan says is true, several former athletes such as Magic Johnson, Mel Farr, Gayle Sayers and Dave Bing have tried their hand at the ownership side of the game. “There are a lot of athletes who have gone into business after their playing years,” said Farr. “But I have to say that [the business is actually] being led by business leaders and entrepreneurs. Now, guys are getting even smarter and doing things together.”
According to Farr, BSAA’s Athletes Rebuild America project is at the forefront of joining investors with sports backgrounds with those from other industries, helping to gather resources and capital, and facilitating their investment in communities throughout the country. “It makes sense for the viability of progressive investing,” he said, “and there is less risk because it’s spread out among a number of people.”
For Postolos, the key to sports investing is figuring out which sport to pursue and learning as much as one can about it. In moving forward one must consider the prevailing ownership structures. There have been a couple of situations in which teams were widely held. For example, the Boston Celtics was once a publicly traded team. But generally, according to Postolos, a team is owned by either one person or a small group. “Every team in the NBA is owned in that manner now,” he said. Researching requirements for controlling ownership or partnership within a given investment group is critical for choosing the right opportunity. “There are also certain financial requirements and tax advantages,” he said. “These tend to be long-term investments, where over the period of a decade, a person can do quite well.
Only time will tell if Jordan will make good on his investment. And as Farr reminds us, the gains will not only be computed in dollars and cents, but also in terms of how African-American leadership within the industry stacks up. “The sports business is one that is a little tricky because most of the [African-American individuals] we’ve worked with have been players. There are more who are [working as] coaches now,” he said.
Although the Charlotte Bobcats continue to struggle on the court, there is no question that they will remain in the spotlight as the only major African-American owned team. “The Michael Jordan venture is going to be one that is studied and viewed heavily from a lot of investors from around the country and the globe,” said Farr. “They’ll be looking to see how he handles being the majority owner of a national basketball association team.”
