You have heard it on the news before. The owner of a sports team sells the team for a ridiculous amount of money. Investors love to buy their own professional sports teams.
Do you dream of owning a professional sports team? If you’re in the market for one, this article is for you. Read this article to learn how investors buy and sell professional sports teams.
The Auction Process
Professional sports teams are sold in an auction. All prospective buyers will compete with others to place their respective bids. Each one hopes the seller selects their bid.
The duration of the sports team auction varies. It can last for a few months to longer than a year. Several factors play a role in the duration of these auctions.
Because it’s a competitive process, it typically takes more than a year. The current owner of the team conducts a thorough vetting process to narrow down the number of prospective buyers. The owner seeks to learn about each prospective buyer’s interest and buying power.
After narrowing down the number of prospective buyers to a handful of groups, the owner will ask them to submit a more definitive bid.
Seeking League Approval
Once a buyer is selected, the process moves on to the next phase. This involves seeking league approval. This can take a couple of months.
The prospective investor will need the league to approve the sale. The investor must also get the vote of the owners in the league so they can get admission as a new team owner. This requires a supermajority vote.
As part of this process, the investor must undergo a comprehensive background check. This is done to make sure the investor will make an owner that fits the mission and values of the league.
If there’s a group of investors who buy a sports team, the group will have to select one person in the team to become the “controlling” owner. This person will have the right to make decisions on behalf of the team.
Owning a Professional Sports Team
There are certain rules that team owners have to follow. Once the sale is approved, the controlling interest in the team can’t be sold without every owner’s vote. If the new owner wants to move the team, every owner must approve it.
Investors may not experience a return on investment until they sell the team. This is one of the reasons why rich investors are the ones who seek to buy a professional sports team.
Individuals who aren’t super-rich can seek to buy a share of a team. These are called minority shareholders. One famous individual who recently became a minority shareholder is Dwyane Wade.
The retired all-star basketball player recently became a part-owner of the Utah Jazz. Click here to read more about Wade’s power move.
Investing in Professional Sports Teams
If you’re looking to become an owner of a professional sports team, you have to follow a process. Prospective buyers of professional sports teams have to bid for a team in an auction and get the league owners’ approval.
Explore the rest of our blog to read more great articles!