Cuban set to offer 625 mil to buy Cubs

[Texsox]

Unrealized value is also found in a team that is drawing about 1/3 of capacity, not selling nearly as much advertising as possible, doesn't have as big of a TV contract as possible etc. You gotta get people interested in the product, no matter how good the place is to see it. No one sees games in Pittsburgh anymore.

 

With near perfect management, which team could realize greater profitability, the Cubs or Pirates? I'm thinking merchandising, ticket sales, everything.

[southsider2k5]

With near perfect management, which team could realize greater profitability, the Cubs or Pirates? I'm thinking merchandising, ticket sales, everything.

 

It depends on what you mean by "profitability".

[Texsox]

It depends on what you mean by "profitability".

 

If you owned either team over a ten or twenty year period, which franchise would offer the best opportunity for the highest profits?

 

Where I am going with this is a bigger question, why do certain owners buy certain teams? I think you were dead on with Pitt as a great possibility because of the home town angle. I think that is a bigger factor than profits for many owners. Others are fans of a sport and want a franchise in that sport regardless of location.

[southsider2k5]

If you owned either team over a ten or twenty year period, which franchise would offer the best opportunity for the highest profits?

 

Where I am going with this is a bigger question, why do certain owners buy certain teams? I think you were dead on with Pitt as a great possibility because of the home town angle. I think that is a bigger factor than profits for many owners. Others are fans of a sport and want a franchise in that sport regardless of location.

 

If you are talking about year to year profits, its the Cubs. If you are talking about total profits its the Pirates. There are two different things there though.

[Texsox]

If you are talking about year to year profits, its the Cubs. If you are talking about total profits its the Pirates. There are two different things there though.

 

I understand, purchase price comes into play and a host of other issues. But it seems that profit isn't the biggest motivator for many owners. I think owning their boyhood team, saving a team for their hometown, is probably a bigger motivator. For that reason, I think you are correct, owning the Pirates is probably more interesting to Cuban then the Cubs. The profit issue may also come into play, but if you look at his running of the Mavs, I doubt he would factor in profits for personal gain, but perhaps profit as a means to reinvest and make the Pirates a contender.

[Balta1701]

If you owned either team over a ten or twenty year period, which franchise would offer the best opportunity for the highest profits?

 

Where I am going with this is a bigger question, why do certain owners buy certain teams? I think you were dead on with Pitt as a great possibility because of the home town angle. I think that is a bigger factor than profits for many owners. Others are fans of a sport and want a franchise in that sport regardless of location.

There are 2 different ways that an owner can turn a profit, both of which are worth mentionning:

 

1. Increasing the value of a team. This would be the White Sox after 05; they increased salary to chew up the additional money coming in through ticket sales, however, at the same time winning the W.S. pushed up the value of the team by something like $30 million.

 

2. Greater revenue than expenditures. The D-Rays are the classic example here; one of the lowest salaries in baseball, with one of the most profitable teams.

 

I think that in terms of guaranteed revenue, the 2nd part, the Cubs are a much better option, because you're almost guaranteed a sell-out every game. It's a stable revenue stream. However, because of the fact that it is a stable revenue stream, and there's not a ton of opportunity for growth other than increasing ticket prices, there's not a lot that can be added to the value of the team beyond inflationary growth. The Pirates, on the other hand, have room for growth in #1, simply because it's a fairly backwards franchise right now, but maybe not as much room in #2, because increasing the revenue is likely going to require spending more money on the FA market.

[southsider2k5]

I understand, purchase price comes into play and a host of other issues. But it seems that profit isn't the biggest motivator for many owners. I think owning their boyhood team, saving a team for their hometown, is probably a bigger motivator. For that reason, I think you are correct, owning the Pirates is probably more interesting to Cuban then the Cubs. The profit issue may also come into play, but if you look at his running of the Mavs, I doubt he would factor in profits for personal gain, but perhaps profit as a means to reinvest and make the Pirates a contender.

 

Look at what the Mavs were worth before he bought them, and what they are worth today. The guy might eat some money on what he enjoys, but he won't lose money on the investment in full. As a matter of a fact, he could easily double to triple the value of that franchise in a few years time. Then even if he was throwing away money on operations, he would be coming out way ahead anyway.