Paintball Team Owners and the Value of Franchises by Jeff Stein

propaintball-iconNote from JM: The following is a guest posting by Jeff Stein of the New England Hurricanes. Jeff raises several interesting points and should provide for some great discussion. Please feel free to leave your thoughts in the comments below.

Team Owners and the Value of Franchises, by Jeff Stein.

Over the course of the past few years, paintball has introduced the idea that professional teams are “franchises” and that these “franchises” have a value.

I believe this started around about 2003 when the NXL came into existence and teams paid for franchise spots which those paying felt gave their team a certain value. Then in 2004, the NPPL locked its professional division and thereby fostered the concept of ‘franchises’ in that league. Of course the NPPL’s system of promotion and relegation stood NPPL franchises on very shaky ground when trying to assign a value, and this was a major point of contention in the final months of the NPPL, as certain pro teams argued against relegation because it removed any value from the team itself). Suddenly, team owners started to think about resale value for their teams. And it has proliferated across leagues, over to Europe and down to the CXBL and AXBL. It has proliferated despite the overall lack of success for anyone trying to create value in a professional franchise and the demonstrated lack of value of their spots.

Sure, Rage bought out the Raiders at the end of 2007. Dallas Elite bought out Arsenal and then sold to Bad Company in 2007. John Snyder bought Arsenal from Tom Fore and then sold it back. But I think only Tom Fore has ever actually profited by the sale of a team (and even so, Tom spent a lot more money running Arsenal than he made selling it).

History aside, let me present a question that I don’t believe has been asked before: is the valuation of “professional” teams, their “franchise’ and/or their spot in a league, a good thing?

Capitalism drives the desire to create value, which means minding the bottom line and accruing equity.
Competitiveness drives the expenditure of funds in ways designed to improve performance.

Photo Credit: UPI.com

Photo Credit: UPI.com

The two are often at complete loggerheads with one another. Certainly in the best circumstances, such as the NE Patriots, spending money to create a champion has vastly increased the value of the franchise, and since the Krafts can hold out for their payday, it makes sense for them to continue to reinvest in their operation. But not all professional teams work this way (I read stories about the Browns, the NFL Browns, telling players to go through a sock bin to pick out used socks when they needed a new pair). And I think it is fair to say most paintball teams are not so well off that they can continue to invest in their own operation while hoping to create value they can sell in the future.

I am taking this to the next level: people who are looking to create value make poor professional team owners. If your goal is fiscal gain, you will not spend the money to be competitive and eventually you will realize this is a sucker bet and walk away from the sport.

Instead of capitalists, this sport needs fanatics as team owners. People who don’t mind losing money year after year after year in order to progress the game (or, at least, progress the game in their players). This sport needs owners who are not looking at valuation nor at how much they can sell out for nor at the bottom line. The sport needs people who don’t understand the value of money (and maybe not the value of time, either) so they continue to “invest”.

I propose that a league of fiscally intelligent team owners would quickly become a league without teams.

Discuss.

13 thoughts on “Paintball Team Owners and the Value of Franchises by Jeff Stein

  1. Samsin McGravy

    Isnt this what Afyershock does tourney after tourney? The havent won an event in how long? And continue to play for the love of the game…

    Reply
  2. Sparky

    Jeff,

    Good little write up and you have made interesting points. I have to say I definately agree with most of what you said. It is however interesting to me how dramatically you have changed your mind.

    You were one of the key people to push the USPL concept.Though the concept in my mind was to create value for teams and so on. You thought that is what this sport needed. Is the lack of success in the USPL your reason for changing your mind?

    Are the wrong people in charge over there…….. or is it just the 7 man format in general. Would love to hear your thoughts.

    Reply
    1. Jeff

      I supported the idea (ideal) of the USPL, but had doubts about the way it was being actualized. I actually backed out somewhat early, but left the door open to a change of heart. And, frankly, sponsorship played a role in my decision. If I had the extra resources (financial and man-hours) I may have thrown my hat in that ring regardless of my doubts.

      I don’t have any particular insight into how the USPL is being run, so I wouldn’t be able to say if it is the fault of the people in charge. Having said that, I tend to doubt it. This was an uphill battle from the start.

      The two issues I originally foresaw were that the league was under capitalized and that the timing was off. I wanted to wait a year and drum up support within the industry to come out with a finished product. I think the lack of funds and the rushed nature of things have hurt the league and I don’t think any group of managers could have worked around that. Sticktoitiveness is going to be key in the USPL’s future, and only time will tell if they will outlast this storm. It is possible that the league survives, if the money is there.

      There is a third issue, one that I don’t think anyone involved in the early USPL saw coming; the sudden lack of interest in the format. I knew the NPPL had been losing teams, but I thought that was a reaction to the formula (country-wide travel, high cost of entry…) and not the format. But as we see the, USPL is having a hard time drawing teams now, so maybe the ship has sailed on 7-man (at least in the immediate future). When you can only get 15 paid teams for a national event with months of advance notice, there is a problem.

      I still believe that teams should have a say in the direction of the sport. I just don’t see it happening anymore. The PSP works, and it works without know-it-alls like myself meddling in the process. I don’t know that it would help that league to introduce councils of captains or steering committees. So that league, viewed only on its own merit, is fine. But taking a more holistic view, the SPORT will not attract business owners without allowing said owners a real say in how things are run.

      Put another way, I could do everything right, but the “value” of my “franchise” is tied into business decisions that I have no say in nor even visibility of. And nobody wants to put the valuation of their investment in someone else’s hands. So, for me at least, this went from being a business to a hobby. And I’d be surprised to find many team owners who say otherwise (with a straight face).

      OBVIOUSLY, teams like the All A’s and Ironmen, owned by the industry, are a different case.

      Jeff

      Reply
  3. Pingback: pbnews24.com

  4. SDA

    This isn’t so much an interesting point as it is the truth. Paintball got turned around when people started to sell young adults dreams that weren’t a reality. If owning a paintball team was an investment then we should all sell. We do this for pride and the want to be better than our friends on any given Sunday.
    The USPL concept isn’t a bad idea it’s just the fact that we are in the worst economic downturn that we’ve seen in 25 plus years. There were and are some key regional indicators that people have forgot to look at. Like the fact that every good regional league has seen a drastic drop in there numbers over the last year. That on top of the fact that people that are making the decisions at the top have no idea what the D3 and D2 teams want and can afford.
    If we see one league next season on a national level it won’t be forever. If and when our economy turns around the PSP will start to see a growth in numbers and at some point someone will fill a void that will exist to start a second national league and history will repeat itself again.

    Reply
  5. raehl

    Forget paintball. Even looking at major Pro sports leagues, a lot of the “value” in owning a Pro sports team is as a collectible. A Pro sports team is the most expensive toy an extremely wealthy person can buy, and they’re bought and sold at values that greatly exceed what their profits would justify in any other industry.

    Your perspective on fanatics being needed is right on. There are only 32 people/groups who own an NFL team. And you can bet that those 32 people/groups own teams not because it’s a good business investment, but primarily because they’ve always been football fans and owning a Pro franchise is just something they’ve always wanted to do.

    Last numbers I could find were 2.8 billion in revenue for MLB, with $30 million in profits. That’s a profit margin of 1%. And most teams lose money. (Things appear better for the NFL, where teams make millions a year – but also cost up to a billion to buy – to the point that you’d make more money investing in pretty much anything else.)

    Reply
  6. Bruce

    Money shouldn’t motivate those who play the game at this point in time – winning against the best competition should be all that matters. Kids, get a job and do whatever you can to stay in shape and practice; you can do this without being “paid”. Subsidized costs are really what matters.

    Drop the term “professional” since it is certainly being misused in the context of paintball: if ALL the teams were paying ALL of their players more than a pittance, the term could be considered for resurrection.

    Reply
  7. Dok

    Paintball franchises are missing some key ingredients when it comes to creating value. 1) Home sights that allow for fans to come and watch their team compete, 2) Ticket sales that generate value to the team in form of revenue, 3) Contracted players that are moved through business dealings again creating value for the team through trading in talent, 4) Trademarks and merchandising revenue through the sale of products to fans as well as many other forms of income that come to franchises through other business dealings closely related to the workings of the teams. Examples being advertising, corporate sales, concessions and or parking revenues.

    Reply
  8. Rob

    Every comment I have read definitely holds merit. I don’t think there is “one” team owner out there that looks at this as a means to an en game of “financial prosperity”. We do it for the love of the sport, whether it is 7 man or xball or woodsball. It’s a way of life. For my team we made this jump to give us the ability to play the “best of the best”, to get beat by the “best” in hope for one day after years of suffering and getting our tails kicked in that we may be one of those teams. It’s all about the challenge, the camaraderie, the passion, and of course for the fun of it all! Jeff thanks for the write up.

    Rob

    Reply
  9. Chriz

    Paintball needs Russian oil tycoons, exactly the same as as English football teams, throw money at it until it works :D

    Reply
  10. Pingback: Paintball News Round up for the week of July 6th-11th. : Pro Paintball – Paintball’s Morning Paper

Add Comment Register



Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>