Could Crowdfunding Save Pro Sports Teams?
WHY YOU SHOULD CARE
Because the people who care the most about a team should own it.
By Sam Rosenthal
In July, the NBA’s Houston Rockets went up for sale, and it immediately became clear that the Rockets — with two superstars (James Harden and Chris Paul) and a huge following in the U.S. and China — might fetch a record price for an American pro sports franchise. Sure enough, they sold in September for a whopping $2.2 billion. The team’s exchange, from one billionaire to another, was nothing if not predictable … and unfortunate.
Imagine, for a moment, if the Rockets’ fans had been able to band together to buy the franchise. They could have elected representatives of their choosing to run the organization, and, among other perks, they could have ensured that the team never moves cities (we’re looking at you, San Diego Los Angeles Chargers and St. Louis Los Angeles Rams). Luckily for sports fans whose teams go up for sale in the future, there may be a way for large groups of a team’s supporters to purchase a team — through crowdfunding. And the leagues should encourage fans to do it.
The Rockets would have become the Green Bay Packers of the NBA.
According to Ben Levine, founder of the crowdfunding site Bearhug, fans of a team up for sale like the Rockets could pool resources on a crowdfunding platform that could be used for buying a team. “On the face of it, if you just need to raise $2 billion, you can definitely do that on crowdfunding,” Levine says, though he clarifies that he doesn’t think $2 billion is a reasonable target. Part of the problem? The fans can’t own equity in the team because league rules don’t allow it — shame on the leagues! Still, fans can become owners in some semblance by raising money toward placing a bid on a team. And Bob Leib, a legal consultant who has worked on team sales and other financial transactions with teams in leagues such as MLB, NBA, NFL and NHL, says there are scenarios in which fans of a team could make a successful bid to buy franchises.
Let’s take the Rockets example: If the Rockets sell for $2.2 billion, and the league lets owners finance up to 50 percent of the total price, any prospective buyer needs to raise “only” $1.1 billion up front. Through crowdfunding, fans could raise $200 million to $300 million (which would be a crowdfunding record, but for this, it’s a reasonable goal). With that much money raised, they could then go to a group of investors and offer the money for the investors to use in their bid for the team — with strings attached. The owners would have to meet the fans’ conditions, such as not relocating the team, giving back to the community … and appointing a singular owner/CEO who would be the face of the organization. In the Rockets’ case, Beyoncé was initially rumored to be thinking about making a bid for the team. If fans had teamed up to support Queen Bey, she just might be heading the Rockets now rather than casino owner Tilman Fertitta (not to be confused with frittata). In other words, says Leib, you would go to a buyer like Beyoncé and say, “‘You can use this as capital, but you have to commit to this’ — and you’ve got a list of 10 things.”
Of course, such a scenario would face some logistical snags, but it is far from impossible. And think of it: What if the NBA and the Rockets had let Beyoncé and fans crowdfund to help buy the team? We’d be looking at a situation where, after Hurricane Harvey and everything Houston has gone through, the city could have rallied together to give the team to Houston, ensuring it would stay in the city for years and installing a leader chosen by the people — one who would just so happen to be the first Black female owner of any major American sports franchise (outside of the WNBA’s Sheila Johnson). The Rockets would have become the Green Bay Packers of the NBA, a team that’s truly a part of its city, and vice versa. It would have been a beautiful thing — and in the future, there’s no reason another team, perhaps in another city and another league, couldn’t make it happen.
“Hypothetically, it could work,” Leib says.
So he’s saying there’s a chance.
- Sam Rosenthal, OZY Author Contact Sam Rosenthal