When I mention the New York Yankees and JPMorgan Chase & Co., you probably think of them very differently. While you might be right to do so, they both serve to maximize the profit of the company and its brand.
According to Forbes Magazine, the Dallas Cowboys is the most valuable sports franchise in the world with an estimated value of $5 billion and an operating income of $365 million. While this might not come close to the worth of Forbes’ number 1 on the list (Apple, with an estimated value of $205.5 billion), it still demonstrates the immense amounts of money that exist in sports. How did sports become such a booming business? How did Super Bowl commercials come to cost$5 million to air? The same way as every other business: By finding their audience and maximizing their profits.
Sports franchises are still increasing in value at a rapid rate that cannot be matched by most corporations. According to Forbes, the Golden State Warriors value has increased by 367 percent over five years and the Los Angeles Clippers’ has increased by 282 percent during that same time span. Imagine if you could invest in these franchises as publicly traded companies. The returns on your investments would be astronomical. Most franchises are owned by a single owner, or a small collective of wealthy individuals, and the returns for these individuals are massive.
Sports franchises are multifaceted; half of their operations are focused on the success of the team while the other half are focused on the success of the brand. While the success of the team can be extremely important to sales and marketing, the operations side of the franchise is often the one that truly makes the big decisions.
A team’s marketing is the most crucial aspect of its profitability. A key example is political demonstrations during the national anthem in the NFL. The spearhead of the protest, Colin Kaepernick, has been unemployed ever since the initial incident. Despite leading a team to a Super Bowl and holding multiple quarterback records, Kaepernick is unable to find a team due to the political and public relations baggage he carries, which may hurt the profitability of a franchise. The image of the brand is important and the possibility of it being tarnished is something that the franchises will go to great lengths to avoid.
While many corporations care about the well-being of their shareholders, some fan bases feel betrayed by the actions of franchises while in search for new markets. In recent history, the Los Angeles Rams, Los Angeles Chargers, and Oakland Raiders have moved (or will be moving) locations in order to expand. The Rams began in Los Angeles, moved to St. Louis, and after establishing roots, decided to move back. The Chargers recently made the move to Los Angeles from San Diego. And finally, despite having one of the most loyal fanbases in sports, the Oakland Raiders will move to Las Vegas as the franchise seeks new wealth in Sin City. The disloyalty towards the Raiders’ faithful supporters hurts sports fans everywhere because of the blatant reason — greed — behind the move.
