Patron Place: Commanders Sale Reflects Evolution of Sports Assets
If all goes according to plan, the Washington Commanders will sell for $6.05 billion later this week, roughly 25% more than Sportico’s most recent valuation and a ~650% increase from the $800 million Dan Snyder paid for the team and its stadium in 1999.
That growth is largely driven by fundamental changes in sports business, including media evolutions that have turned onetime regional event operations into international, year-round content engines. Revenues have ballooned. And new investors from the worlds of private equity, pension plans, and sovereign wealth funds appear eager to expand a buying pool for the appreciating assets. “Prices are high,” longtime sports industry advisor and investment banker John Moag said. “But there’s a legitimate reason that they’re that high.”
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Meanwhile, one element of those calculations is impossible to quantify. The heart.
Steve Ballmer became Exhibit A of billionaires willing to overspend for a once-in-a-lifetime opportunity, buying the Los Angeles Clippers in 2014 for 12 times the team’s expected revenue. “No team in the history of sports has sold for six times total revenues, so that should give you an idea of how crazy this purchase price is,” a sports banker said at the time. MLS teams now routinely sell for 12 times annual revenue. The Commanders are going for roughly 11x.
Days after acquiring the Mets for $2.4 billion in 2020, Steve Cohen succinctly summarized an increasingly common philosophy: “I’m not trying to make money here.”
Josh Harris will be the latest big-money buyer in a wave of purchasers coming in with cash to burn and goals beyond the bottom line. With their recent investments, these owners have also established themselves as patrons in a new model for American sports business.
According to Sports Illustrated, the Chevy Chase, Md., native recently told NBA commissioner Adam Silver that the chance to own DC’s team was something along the lines of “a very unique opportunity to give back to my community, and be part of a team I rooted for when I was growing up.”
Of course, being willing to spend does not bring guaranteed success. Mets fans are learning that this year, as did the Washington supporters around for Snyder’s early years. And now, Snyder stands as proof that you can spend exorbitantly to buy a team and still end up far ahead when it comes time to sell—just because a team is purchased for more than the present day value doesn’t mean it won’t end up looking like a steal if sports continue to grow.
But it is still worth recognizing the different viewpoint of today’s new owners. Seeing team owners as more than business managers means holding them to different standards, especially as they profess to view the position as an opportunity to give back. Mere words or token support won’t be enough. It also impacts how teams navigate discussions with local governments over real estate options, tax breaks and other financial subsidies.
The most traditional forms of patronage lie in the art world, where pleasure and philanthropy are understood to drive purchasing decisions as much as profit. Going back to renaissance times, landholders, bankers and churches funded talented artists out of benevolence as well as a desire for status or influence, always with an eye on their related businesses. If only free agency had existed in Leonardo da Vinci’s day …
With sports grabbing more cultural power, it’s natural to see a similar system of patronage develop. Whereas business leaders of 100 years ago established universities in their names, today’s titans eagerly funnel their cash into those schools’ sports facilities and NIL collectives too.
Sometimes, corporations have played a similar role. The Green Bay Packers, after all, bear their name because the Indian Packing Company supplied sweaters, footballs and a few sets of shoulder pads to the upstart team in 1919. The tradition continues in South Korea, where major corporations own teams “as a form of patronage.”
In each case, profit is rarely cited as a key decision driver. Though it’s usually not forgotten, either.
“It’s not about making money always,” new Suns and Mercury owner Mat Ishbia told Bill Simmons, explaining his decision to forego the established regional sports network model after buying the teams for $4 billion. “People are always so focused and thinking about money, money. I want to just go and do good things and have fun and win and succeed.”
But, he added a moment later, “Money has always followed wherever I’ve went in those situations.”
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