He suggests he won't relocate the team to Seattle (doing so would be "value destructive"). But I wonder if this purchase itself destroys the value of his own net worth. That's a lot of money to pay for what was just a few years ago the hallmark of a terrible pro sports franchise.
The NBA has more of a chance than any other sport to become truly global.
American football has had a hard time expanding and will deal with injuries in the future, soccer (sic) is already global, just not popular here, baseball is an entrenched classic, and hockey has always been regional.
The fact that the Clippers went from a laughing stock a few years back to where they are now actually says a lot. They'll probably get to keep Paul and Griffin now that Sterling is gone, and due to the Lakers being bad they have a massive market to tap into.
Yeah they won't be worth more than his investment any time soon, but in 20 years? That's not out of the question. Not to mention unless you are Donald Sterling or someone like him you don't usually buy a team to make money, you buy it cause there are only 30 other people in the world that get to do it. That's priceless.
Purchasing the clippers will not decrease his net worth. Owning a major sports franchise especially one in a major market will always be profitable. You're guaranteed to turn a profit every single year. Gate tickets, TV contracts, merchandise, and profit sharing are all very good revenue source for a sports team. He also doesn't have to pay money to build a new arena because Clippers just pay rent to play at Staples Center.
Sports is one of the few businesses that will thrive under any economic condition. There will always be fans that shell out money to watch their team.
Donald Sterling always made money from the Clippers from the year he bought it. Just continuing the operations as they are today would put Ballmer in the black on this "investment". (I imagine owning a Sports team probably has some tax advantage loopholes too)
Not to mention Larry Ellison's purchase of Lanai island for $500MM+. Now that is a terrible purchase from a investment standpoint, but hey, the guy was $40BB+, so it's chump change you know? :(
I suppose he could give the "Dribblers, dribblers, dribblers" talk. But joking aside I've wonder what the value proposition was for owning a team (wonder why Cuban owns the Mavericks, etc) Sure there is a status symbol kind of thing but what kind of return do you get on that capital? Can you get $2M/year out of it? $20M? $200M? What is the internal rate of return from the franchise?
Wow, 0.75% on your $2B. I suppose it must be the status thing then since putting that $2B in a treasury ladder would get you a guaranteed 2.2% or about $44M annually (and tax free, with no wondering if your T-bills were going to make it into the playoffs :-)
Hahaha all my MSFT friends gave me crap for the unoriginality when I quoted it on FB too. I imagine there must be a boatload of inhouse clippy jokes at Redmond ;)
17 comments
[ 3.6 ms ] story [ 48.9 ms ] threadA year later, in 1981, when Microsoft incorporated, Ballmer held 8% of the shares.
That was a pretty neat trick.
American football has had a hard time expanding and will deal with injuries in the future, soccer (sic) is already global, just not popular here, baseball is an entrenched classic, and hockey has always been regional.
The fact that the Clippers went from a laughing stock a few years back to where they are now actually says a lot. They'll probably get to keep Paul and Griffin now that Sterling is gone, and due to the Lakers being bad they have a massive market to tap into.
Yeah they won't be worth more than his investment any time soon, but in 20 years? That's not out of the question. Not to mention unless you are Donald Sterling or someone like him you don't usually buy a team to make money, you buy it cause there are only 30 other people in the world that get to do it. That's priceless.
Sports is one of the few businesses that will thrive under any economic condition. There will always be fans that shell out money to watch their team.
Not to mention Larry Ellison's purchase of Lanai island for $500MM+. Now that is a terrible purchase from a investment standpoint, but hey, the guy was $40BB+, so it's chump change you know? :(
The Dallas Mavericks make about $40M.
Bonus LA Clippys humour [3].
[1] https://news.ycombinator.com/item?id=7819188
[2] https://news.ycombinator.com/item?id=7819293
[3] http://t.co/LbPyPcRgd8