Rising equity markets, owner friendly collective-bargaining agreements, healthy business metrics. Despite these factors blessing sports leagues, or perhaps because of them, the sale of teams has been sluggish at best.
“I haven’t seen it this quite in three or four years”
In Major League Baseball, for example, there has not been a sale of a team in two years, the last being the San Diego Padres and the Los Angeles Dodgers.
“It is pretty unusual,” said Allen & Co. investment banker Steve Greenberg, the top sales adviser in baseball. “There are a lot more buyers than sellers.”
Currently, only one team in the top four leagues is officially on the market, the Milwaukee Bucks (Greenberg is the adviser).
Sports teams can sell for a few reasons, ranging from personal issues (a divorce drove the Padres sale) to financial problems facing the owner. The new CBAs, by better controlling labor costs, have made owning a team a less financially risky prospect, reducing red-ink induced sales.
“People are holding on because media rights continue to rise,” said Sal Galatioto, whose Galatioto Sports Partners advised the sellers of the Sacramento Kings last year. “I haven’t seen it this quiet in three or four years.”
Four years ago the mergers and acquisitions market was still recovering from the financial crisis, so the comparison is a stark one.
Galatioto for one is busying his firm with the sale of limited partnership stakes. That market has risen with limited partnership positions now one of the only ways to get ownership in sports, even if it doesn’t bring control.
Not all agree the M&A market is quiet. Rob Tilliss, founder of Inner Circle Sports, had a busy year in 2013, advising on the sale of the NHL’s Florida Panthers and New Jersey Devils, to name a few. The financing markets are offering cheap money, he said, making it easier for buyers to cover rising values.
“It is a small number of lenders, but they are hungry, and they are active,” he said.
But Tilliss is an outlier with his opinion.
Take Bob Caporale, chairman of Game Plan, who said that while it may be a matter of simple timing, the market for big league sports teams is very quiet.
That all said, there are other markets. Major League Soccer has seen several team sales, and many investment bankers are working overseas in European soccer. And there are a steady stream of ancillary sports deals, ranging from marketing agencies to technology companies.
That may be where the juice in the sports mergers and acquisitions market stays, the bankers say. With satisfaction high from owning a team, and financial losses rare, Greenberg’s question is this: “Why would you ever sell one of these things?”