Owners Split by Cash, Success
Published: Friday, February 22, 2013
Updated: Friday, February 22, 2013 03:02
This past Monday, longtime Los Angeles Lakers owner Dr. Jerry Buss died from kidney failure at age 80, inspiring an outpouring on ESPN of reflections on and tributes to his life and career. In NBA circles, after all, even those who despise his team remember the shrewd, insightful and charismatic Buss as one of the greatest owners in NBA history: The Lakers were far and away his most prized possession, and he put every ounce of his abundant professional and business energy into them because of it.
A few years ago, Buss passed the team on to his son Jim, who is unfortunately drawing more comparisons to Fredo Corleone than Michael. (Jim Buss has never figured out the casino business, either.) When the younger Buss’ influence in the NBA started diminishing, it became clear that the NBA — and all professional sports, for that matter — need more owners like Jerry Buss who are willing to sacrifice a little in profits for the sake of the team’s winning percentage.
Which got me thinking: Is it wrong when owners take an anti-Buss path and care more about profit than team success? Obviously, it’s better for the sport as a whole (especially from the fans’ perspective) when wins matter more than the operating income, but the question is whether it’s wrong for an owner of a possession in a capitalistic society to use that possession — in this case, a sports franchise — for profit first and foremost.
A common misbelief in the sporting world is that caring about winning and caring about profit are completely aligned. In reality, while there is a strong correlation between a team that maximizes winning and a team that maximizes profit, the connection isn’t perfect.
Before 2004, the NHL did not have a salary cap. Jeremy Jacobs has owned the Boston Bruins since 1975 — thus operating in both eras — and the team made the playoffs every year during his first 21 years of ownership while usually failing to have a realistic chance at a Stanley Cup. This apparent contradiction was made possible by the fact that, almost every year, Jacobs spent just enough money to generate interest in the team throughout Boston, as the team sold out nearly every game; he just didn’t spend enough money to win it all. It should be noted that, according to Forbes, Jacobs is now worth $2.7 billion, while his franchise is worth $350 million, so it’s not like he was too light in the wallet to pay for a good team. He just got a kick — and a bigger bank account — out of toying with Boston hockey fans.
Other examples of owners like this aren’t hard to find. Perhaps the worst case is that of Jeffrey Loria, the owner of MLB’s Miami Marlins who, in 2011, spent highly on free agents for the sole purpose of suckering Miami-Dade County’s citizens into allocating some $155 million of taxpayer money for a new stadium. Then, once the Marlins got off to a bad start in 2012, he traded away every decent player on the team in multiple fire sales. Miami citizens are now low on cash, Marlins fans now feel cheated by a franchise that acted like it cared and Jeffrey Loria is now even richer than he was before.
While no sports fan likes seeing such examples, is it actually immoral when owners care more about profit than anything else, or is it just annoying? In my view, the answer lies in the way that owners market their teams to their fans. If fans are sold on the idea that the franchise cares about winning, then the least that they deserve is for the owners to actually care.
I realize that the previous sentence makes me sound naive. I’m well aware of the fact that businesses in today’s world aren’t always honest in their marketing. Coca-Cola recently launched a campaign proclaiming that they truly care about obesity in this country. And then they told me what a great investor Bernie Madoff is.
The Coke example demonstrates where I draw the line between businesslike and dishonest. If a chocolate company wants to tell us that chocolate is a great thing to buy significant others on Valentine’s Day because of tradition or some kind of special feeling that it elicits, that’s fine. Just don’t tell us that a box of chocolates for dinner every night is good for our health. There’s focusing on the positives, and then there’s just flat-out lying about the negatives.
It’s the same idea with sports teams. While I want each owner to care about winning more than income, I wouldn’t find it immoral for an owner to care about profit first if he or she isn’t disingenuous about it to the fans. In short, don’t tell your fans you’re in it to win it when that’s simply not the case.
But trying to put people in the seats with that approach probably won’t work. Its difficulty means that it’s a road owners usually don’t take, which is why I have a problem with most cases in which owners prioritize money over winning. If public money was involved in the construction of a stadium, it’s even more important to care about winning, because no city would agree to put its tax money into a sports building if it felt that the owner didn’t want to win.
So rest in peace, Dr. Buss. We can only hope that more owners will one day begin to follow your lead.
Tom Hoff is a sophomore in the McDonough School of Business. DOWN TO THE WIRE appears every Friday.