What about a pension fund? The privileged tax status of pension funds mirrors that of collegiate foundations, and both invest in very similar ways. A hedge fund? Baseball has to lay down the rules, but it doesn`t seem that different from allowing foundations or pensions to own minority interests, and it`s certainly not much different from a special purpose vehicle. Heck, hedge funds are already largely specialized investment funds, and foundations and annuities make up a significant portion of the assets of hedge funds under management. And yet, despite these blatant conflicts of interest and the eventual destruction of these teams, people were still allowed to own more than one MLB franchise. It just didn`t make sense, but there was officially nothing in the rules that stood in the way of it. If someone wanted to start a Major League farm team and stack the best draw franchise, they could. I`m just throwing this up for discussion, but what do you think about the cities where the teams live that can invest in those teams, in collaboration with them, get money for the redevelopment of new stadiums and other things. I`ve often thought this might be the best-case scenario for the future of team ownership, and it could also help keep teams from moving, which hopefully is terrible. There are a few details we just need to see. What about a mutual fund? Could a fund provider create a closed-end fund that invests in a team or even a pool of teams? That has not been said. Could an ETF do the same? This would require smart financial engineering, as ETF stock requires a create/redeem mechanism that is at odds with how major league ownership works, but closed-end funds behave in much the same way.
But this assumes that in the rarity where a team is sold, they set the price of sales based on the sponsors` transactions. That probably won`t be the case, and if it does, we`re just going back to billionaires buying things at inflated prices and losing money. The worry would be if the billionaire had to go into debt to buy the team, it could cause trouble for the team, but MLB has rules that prevent teams from taking on too much debt (clubs can take a maximum of 12x their operating revenue). Instead, baseball teams, and indeed most sports franchises, ”trade” on the private market. The private market really means a few specific things. First, there is no transparent price. You can`t open your Bloomberg terminal and see what the current price of Houston Astros stock is. Unlike publicly traded stocks, pricing is usually based on expression of interest.
Potential buyers have roughly an idea of what it would cost them, but they can`t calculate what would be needed to take ownership of it (51% of outstanding shares multiplied by the market price of the shares). On the other hand, however, it seems that sports franchises are mostly trading at a high price, probably due to the prestige factor of being an owner. It seems that every time a team is sold, the reaction of the public is ”Wow, that`s a lot of money,” which reflects that bonus. Bloomberg`s Matt Levine put it perfectly when he said, ”(owning sports teams) is just a side operation; It is above all an object of status and a luxurious fan experience. I think the question we have to ask ourselves is… It`s important? I mean no, not really. There is no real evidence or reason to worry that MLB teams are being mismanaged or that valuations are rampaging and creating a bubble. This is usually a method for wealthy individuals to make private transactions in a private market with each other.
However, this rule has not always stopped such gadgets in the game. In the 1950s, the Kansas City Athletics were essentially a farm team for the New York Yankees. The owner of the A`s, Arnold Johnson, was a longtime business partner of the Yankees and owned Yankee Stadium before buying the A`s. The team would be a disaster and just a bullpen for players the Yankees were interested in. I wanted to make a comparison with some European football teams, but I don`t know exactly how it works in Spain with these clubs, but isn`t this Packers ”ownership” a myth anyway? They only offer ”stocks” every few decades and stocks can`t go up or down and you can`t sell them.