Buy In to the D-League

by David A. Arnott on May 1, 2009 3:02 PM EDT

I don't know nearly enough about the D-League as I feel like I should, but Ridiculous Scott of Ridiculous Upside is on to something.

Again, emphasizing that I'm just shooting from the hip:

-- How much money does it actually take to run a D-League franchise? Has anything changed from information cited last April that buying into the league costs "in the low seven figures"?

-- If so, here's my thought for someone with more capital than I do: Now is the time to buy. With a slumping economy, there is probably a discount to be had from someone unwilling to ride out the storm, or from the NBA itself, if it's willing to add more teams. Combine that with convincing a team that its best interests are in ownership of a D-League team, and you're gold. You buy 50% plus one. The NBA team sinks whatever they think is appropriate into the minor league franchise. Now, you need to find the rest of your investors.

-- Here's my crazy twist: Let employees buy part of the team, and take that into account when considering potential employees. Imagine I'm a passionate basketball fan applying for some sort of communications/operations/jack of all trades position with a D-League team, and they tell me that my application will receive added weight if I agree that as a condition of my employment I purchase $10,000 worth of the team. I'd have to consider taking out a loan to do it. I can sell that stake any time I want, if I can, but there have to be enough talented people willing to, essentially, pay another college tuition in order to work in pro basketball.

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First, low 7 figures is correct, but rumor is buying a team is cheaper if they’re folding, so that helps.

The best thing, I think, would be finding a local investor. With the new hybrid model, the NBA can pay for what they want, and the local investors can stroke the ego by owning something along with an NBA team, along with possibly turning a profit with the right mindset.

I like where you’re going with your third bullet. I don’t know if it’d work (I’m not willing to take out another loan when I’ll more than likely not make a profit to move to Bakersfield and be the PR Guy), but it’s an interesting concept.

Blogging at RidiculousUpside

by Scott Schroeder on May 1, 2009 3:56 PM EDT reply actions

Anyone who can afford to work for a D League team...

…cannot afford to buy a $10k stake. Seriously, what bank is going to loan someone without a job, moving to an unstable minor sports franchise a loan right now?

I do agree however that there should be an expanded ownership plan that involves employees and, if possible, people in the community. Look at the Green Bay Packers for the role model on this policy. Not only does having a large group of community members invested make it easy to buy a team, it creates a lot of local interest and gets people out to the arena to watch them play on a consistent basis. I would even operate this as a non-profit.

Guys like us are interested in buying a team for the love of the sport, not to show off how rich we are and boost our egos. That being said, I cant see any reason not to open this up to as many shareholders as possible.

by warriorsvictim on May 1, 2009 6:25 PM EDT reply actions

Expanding ownership is the main point, true. However, I don’t think it’s as bad a loan as you might think. If you’re a bank, would you rather give someone a loan for grad school right now, or a loan they apply for with the understanding that it’s part of an employment package?

In the end, the point is to think about new ways to spread the cost of ownership around, because if more people have a stake in the team’s success, the better.

Rufus on Fire -- SB Nation's Charlotte Bobcats Blog

by David A. Arnott on May 3, 2009 9:17 PM EDT up reply actions

but how would you afford repayment?

There is no income from the investment like when someone purchases a taco truck and becomes an independent business owner.
There arent going to be sufficient earnings to provide every owner dividends that would equal the payments on the loan.
Employee/owners would be relegated to having to add payments to their existing monthly expenses.

I agree with the premise, but not the plan.

by warriorsvictim on May 4, 2009 7:27 PM EDT reply actions