Doc O'Connor, co-founder of Arctos Sports Partners, explains how labor agreements and cost controls have contributed to the rise in sports franchise valuations.
Opinion
Customer experience matters more to team economics than winning in MLB
“In baseball, in hockey, and in Major League Soccer, winning is probably more important, but even in those circumstances, winning and losing is less important, I believe, than the customer experience.”
Assertion Supported
The losing Knicks led NBA revenues until the Warriors' new arena
“The garden was at capacity, or certainly near capacity, and we sat atop the revenue food chain for the entire time until the Golden State Warriors came along and beat us in many revenue categories with their new arena”
Insight
Sports franchises are legal monopolies with call options on ancillary businesses
“These are legal monopolies that exist inside and have geographic exclusivity in most cases, except those cities where there's more than one franchise in a given league, but they're given very clear geographic parameters within which to operate, and it gives an…”
Insight
Investing in sports teams is fundamentally a content and IP play
“Ultimately, I believe this is all a content business. We are investing in the content that is generated by these teams and leagues, franchises, and all that derives from that content, including hard assets, like venues, like marks and logos, media content, etc…”
Insight
Value created for a sports league benefits all rival franchise owners
“But remember Ted, in addition to being intense competitors on the field, on the court, on the ice, whatever it is, more importantly, they're all partners. So if Arctos or any entity for that matter can bring value to the league, it's a value to all 30 or 32 te…”
Insight
Owning venues and ancillary real estate insulates sports teams from losing
“If you own your arena, if you own your venue, if you own a bunch of the ancillary assets, winning and losing becomes less important.”