Ever since Russian billionaire Roman Abramovich bought Chelsea Football Club in 2003, other wealthy investors, both individuals and conglomerates, have scrambled for a piece of the sports world. Business investors have been known to express an interest in various sports teams or clubs, ranging from basketball and hockey to baseball and National Football League (NFL) teams. As an ardent sports fan, you can probably mention a few of these investors.
The question you might be asking yourself is why buy a team or club in the first place? Why aren’t these investors satisfied with investing in bonds, stocks or other businesses?
Well, investing in sports makes sense since it is a multi-billion dollar industry. Although they are not immune from economic shocks, sports teams and leagues remain lucrative areas of investment. Sports teams can have franchises, intensely loyal fan bases and are relatively stable and predictable.
Business investors can take advantage of the numerous commercial interests in the sports sector, ranging from manufacturing and retailing of sports goods and athlete apparel to player management agencies and the media houses interested in the sports teams. They can also seek newer and bigger marketing avenues for their brands (products, services, etc.) through sponsorship association with various sports players and tournaments.
The sports teams and clubs usually welcome business investors due to the need for capital. Investor capital is needed to keep the team going, purchase kits and equipment, and pay for transportation and other costs that come with running a team. Furthermore, the capital comes in handy when seeking new talent (players, coaches and managers) that will hopefully help the team win more tournaments.
A savvy business investor will know how to leverage the experience he has in business to improve the team. For instance, an individual like Fahad Alrajaan, one of the biggest and most successful investors in the Middle East, can be an asset to a team. He knows how to make smart investments and has a wealth of experience that he can use to improve any team he wishes to invest in.
Of course, there is the other side of the story. Business investors often have no clue on how sports teams should be run, and sometimes their interference can lead to disaster. There are investors who use sports clubs as a way of channeling their ill-gotten wealth while whitewashing their public image. You are sure to have heard about some examples of these.
Additionally, some fans feel that business investors actually ruin the game. By pouring too much money into any sport, competition becomes limited only to those teams with enough funds to buy the best players. Fans also complain that ticket prices are often hiked thanks to these investors, meaning that they have a harder time showing up for games to support their teams. Moreover, once investors take over, fans and other team supporters are hardly ever consulted on matters affecting their teams or clubs, making them feel alienated.
There is no doubt that having a business investor backing a team can be a good thing. However, if not well regulated, it could turn out to be a disaster, leading to poor team morale and disgruntled fans.
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