Millionaires need not apply

In 1960, Arnold Johnson sold the A’s to Charlie Finley for $4 million ($31 million today).

In 1981, Finley sold the team to Wally Haas for $12.4 million (also about $31 million today).

Steve Schott and Ken Hofmann bought the A’s from Haas in 1995 for $95 million ($140 million in 2013), followed by Lew Wolff and John Fisher buying the franchise in 2005 for $180 million ($210 million today). If you’re looking for hockey-stick style growth, owning a pro sports franchise is a good bet.

That makes the big news this week out of Sharks camp rather eye-opening. Partners Kevin Compton and Stratton Sciavos are selling their stakes to Hasso Plattner, who has until now been the silent money in the ownership group. A reason cited was ongoing losses sustained by Sharks Sports and Entertainment, totaling $15 million during the 2011-12 season. Assuming that they’re not engaged in accounting hijinks, Compton’s and Sciavos’s individual losses (or cash calls) were probably in the $1-2 million range. While I can’t find a published net worth of either, it’s clear that neither approaches the wealth of Plattner, the SAP head (and Larry Ellison foil) who is worth $7.2 billion, more than the Giants’ Charles Johnson and Fisher combined. For Compton and Sciavos, $1 million is nothing to take lightly.

Plattner even admitted today that hockey teams don’t make money. A man of his wealth can truly own a team like the Sharks and absorb a loss without batting an eyelash. He also owns CordeValle golf course in South County (San Martin), several other golf courses in Africa and other hotels. That doesn’t mean he’ll start going crazy with free agent signings in the future, but he can afford to be less concerned about having to make cash calls when the time comes. The Sharks aren’t hurt by turnout at HP Pavilion. They’re hurt by lagging national and local TV revenues. Both of those can improve over time, but they’re definitely playing a long game, not one where a millionaire coming in might look for 8-10% annual returns. The Sharks’ lease is on the second of three five-year options, the last of which ends in a decade.

It’s that return-poor situation that probably doomed Greg Jamison, the former Sharks CEO who missed today’s deadline to assemble a group to save the Coyotes in Phoenix. That’s despite Glendale, AZ promising an eight-figure subsidy for each of the next 20 years to offset the team’s operating losses. Now that a new City Council has promised to not give away the farm for another Coyotes ownership group, speculation is rampant that the team will once again relocate. Prime candidates include the Toronto suburb of Markham, Ontario, where the City Council approved an arena last night. The favorite may well be Seattle, where an arena deal is in place and an ownership group has deep pockets, especially in the form of Microsoft CEO Steve Ballmer.

If you want to be taken seriously in the business, it’s best to have at least one multi-billionaire on your team to cover the occasional lean times and cash calls. Especially in hockey.

19 thoughts on “Millionaires need not apply

  1. Anybody who thinks the NHL owners were lying about Big $$ losses just needs to look at what just happened to the Sharks. With most revenues from ticket sales and little from broadcasting, there is a big chance to lose money given the salaries they are paying. NHL teams have to have a deep playoff run to be profitable. The Sharks had their shortest-ever playoff run (two home games in the least-lucrative first round) and out.

  2. The NHL would be absolutely foolish if they don’t steer the Coyotes to Seattle.

  3. the NHL needs to eliminate few teams. Too many teams. Teams like the Sharks can’t make money. No big money TV contracts

  4. Of course sports teams never make money. Add 501(c)’s and all sorts of organizations to that list. Watch “The Producers” for a lesson.

    Last time I was here I got crap for calling the clubhouse a dressing room. Sorry, I come from show biz. Guess you’ve never been there. My bad.

    So did any of you see the sorry state of the dressing rooms at Fanfest? Not me, baby. Season tickets. Oh yeah.

    It’s Springtime. For Lew Wolfe. In Oakalnad.

  5. @Daniel,
    Are you seriously suggesting that the NHL eliminate the Sharks? (If so…WOW!)

  6. @Freddy,
    Enjoy it while you can..

  7. hell no, I am not suggesting that the NHL get rid of the Sharks but they have to eliminate teams from the south. They already lost a team in Atlanta. FL, Tampa Bay, Carolina, Nashville, Columbus to name a few.

  8. Keep the teams, I like the number of teams in nhl. If the sharks are not making money, wonder if they would like to be part of the Colisuem city deal..Raiders and Sharks coliseum city

  9. @Daniel,
    Thanks for the clarification. I’ve always felt Vegas would be a good candidate for NHL: hockey not on the books (?) and a town hungry for any professional sports league.
    @Berry,
    Really?

  10. re: If the sharks are not making money, wonder if they would like to be part of the Colisuem city deal..Raiders and Sharks coliseum city

    …So you think the Sharks might be interested in paying for their own $500 million arena in Oakland? I kind of doubt it. The essence of Coliseum City is the three existing teams all paying for their own facilities – no takers so far.

  11. The Sharks have to go deep in the playoffs every year or they don’t make money.

  12. Yes, that’s what I said. NHL teams need a deep playoff run to make $$ and the Sharks are known as playoff disappointments. The NJ Devils, who usually lose piles of money, actually made money last year by making it to the Stanley Cup Finals. Moving the Sharks out of Silicon Valley and into corporate dollar-challenged Oakland and having them build their own $500 million arena is not exactly the way to profitability for the Sharks.

  13. “Steve Schott and Ken Hofmann bought the A’s from Haas in 1995 for $95 million ($140 million in 2013), followed by Lew Wolff and John Fisher buying the franchise in 2005 for $180 million ($210 million today).”

    That is, if you buy the official inflation rates the Federal Reserve releases. The definition of the CPI was changed somewhere around 1980. Kind of interesting that the prices the team sold for before the change were both adjusted to the same price(31 million), yet after the CPI was changed, the price has exploded.

  14. Sort of a fan’s dream–a multi-billionaire owner who stays in the background, lets the (hockey/baseball/etc) people do their jobs, and doesn’t worry about the bottom line too much. One problem: Where was this guy pre-lockout/pre-salary cap, when the Sharks were penny-pinchers? I can think of a year or two when a few rentals might have put the team over the top.

  15. Oakland Raiders and Oakland Sharks for the new Coliseum City in 2018, as well as San Jose A’s Cisco field. Everybody happy. Cant have it both ways pjk.

  16. And why don’t we have the Yankees relocating to the abandoned Coliseum while we’re at it?

  17. the idea of the sharks moving to Oakland is pretty far fetched. Consider that every major league team in Oakland is either committed to moving, or considering moving. There is a reason.

  18. Beileve Jeff. Beileve

  19. Contraction by any of the major sports ain’t going to happen. The Sacto Kings – selling for $525 mil.? Lew Wolff purchased the A’s for $180 mil. in ’05, now the team is likely worth $700 mil. minimum. There are enough (include Sacramento) cities looking for an NBA or NHL franchise that these cities could form their own leagues. MLB likely won’t be contracting any teams either (contrary to the giants owner’s groups’ fantasy) not with the value of teams skyrocketing. Besides, the cost of buying out an MLB franchise would be too costly for MLB owners. And MLB contracting would set a dangerous precedent for MLB also – no other major sports leagues (NFL, NBA, NHL) will be contracting teams – MLB would be the only sport to do so – this could create a bad image problem for MLB. Not to mention the fierce battle they would receive from the MLB players’ union if MLB contracted franchises.

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