Note 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.
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.