Team Ownership: Private or Public?

With so much money on the line, the ownership and structure of a sports team is an incredibly important component. Some teams are privately owned by a single person, with varying degrees of direct control over their team. Other teams are publically owned and traded, and the shareholders are the owners of the team (many teams still retain a chairman to conduct inter-team affairs). While both structures have their pros and cons, it is ultimately the privately-owned teams who have the most success financially.

The National Football League is the world’s most profitable league. Each of the NFL’s 32 teams is among the top 50 most valuable sports franchises. 31 of these teams are privately owned. The only publically-traded team is the Green Bay Packers.

The Green Bay Packers are not only the sole public NFL franchise; they are the only publically owned team in any of the 4 major American sports leagues (NFL, NBA, MLB, and NHL). They also reside in the smallest city of any NFL team. The city, whose population is 104,057, is the effective owner of the Packers.

Despite being so different from other NFL teams, Green Bay boasts some of the most loyal fans in the NFL. Every game of theirs sells out, yet their season ticket waiting list has over 80,000 people on it. Their stadium is a reminder of the old days, before luxury boxes and endless advertisements. This is because the city itself funds the team, and therefore has little need for ads (or expensive tickets). No other team can be public because of rules and guidelines for ownership set by the NFL (Green Bay was grandfathered in).

Sounds good, right? To a fan, the Packers are the greatest organization in sports. No high ticket prices, no stifling ads, no megalomaniacal owner. From a business perspective though, there is a reason no other team is publically owned.

The Packers do fine financially. They have the reputation and fans to keep themselves comfortable with money for decades to come, not to mention a beneficial revenue-sharing system that keeps all NFL teams out of the red. However, the benefits of having a private owner are major. First, owners have massive amounts of capital to sink into the team. This capital goes to many things, including improved facilities (for players and fans) and, most importantly, salaries. Leagues that do not have a salary cap can spend an infinite amount to sign players. The MLB’s New York Yankees are routinely criticized for outspending every other team, yet they have more World Series titles than any other team.

Private owners are also more open to outside advertising. Once again, advertisements are a fan’s nightmare, but they also generate even more revenue for a team. Owners are commonly criticized for only caring about money instead of fans, but the wealthiest teams attract the best athletes. Of the five most valuable sports franchises, four of them are privately owned.

As a sports fan, I envy what the Green Bay Packers have. The game day experience in Green Bay is unparalleled due to its history, prestige, and unique ownership. However, the bottom line of any business is profit, even for sports teams. While the Packers are an example of a publically-owned team done right, the privately-owned teams exist today because they had the finances to survive through tough times. The fan in me would love to own stock in my beloved team, but ultimately the privately-owned teams are the financial juggernauts of the sports world.

Sources & Further Reading:

http://www.forbes.com/sites/kurtbadenhausen/2011/09/07/the-nfls-most-valuable-teams/

http://www.ilsr.org/rule/sports/2789-2/

http://www.niu.edu/law/organizations/law_review/pdfs/full_issues/31_1/Green%2069-93.pdf

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One response to this post.

  1. […] also wrote an article about different ways franchises are organized, specifically public and private ownership. I especially liked writing this article because I was […]

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