Why Investing in Sports Strikes Out on Wall Street
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What is the main topic discussed in this episode?
This is Your Money Matters from The Wall Street Journal.
Welcome to Your Money Matters. I'm J.R. Whalen in New York. Some investments are like home runs. Others put investors up against the eight ball or they strike out altogether. But investments tied to sports and sports revenues... Well, they're about as rare as baseball's triple play.
Why are direct investments in professional sports teams rare on Wall Street?
Wall Street Journal contributor Dan Weil joins us via Skype to discuss. So, Dan, as you point out in your Wall Street Journal piece, investing in sectors or businesses you like isn't difficult. But when it comes to sports, a lot of what forms the lucrative empires in sports mostly occurs in private transactions and is really out of the grasp of investors.
Yeah, that's right, JR. There was a time during the 1990s when a lot of teams were traded publicly, but the stocks didn't do very well. And most of these owners don't need the capital. So the idea kind of faded away.
There is one ETF that's sort of an indirect investment in pro sports. It more or less invests in the sponsors.
Analysts' complaints about it are that it's not really a direct play on sports because it includes companies such as Amazon and Microsoft. where sports doesn't really move the needle for those companies.
It's Pro Sports Sponsors ETF, and the ticker symbol is F-A-N-Z. And I guess if you wanted to invest in some of the commercial ventures that sponsor teams, it's a decent way for investors to get their hands on some Fortune 500 companies.
Well, that's true, although to the extent you're investing in a sports venture or I mean, I suppose you could argue if you have all the sponsors of a sports venture, you're investing in it in a pretty thorough way. But what you're really investing in is the entire company. If you're investing in Microsoft, you're essentially investing in its technology business, not the sponsorships it's making in the sports arena.
And in your story, you list some areas where there are a few ways investors can get in on the action, but that list is very limited.
The Atlanta Braves, WWE, the Wrestling League, Formula One, auto racing, some soccer teams in Europe. So there are isolated examples, but there aren't many.
And so the investment there is not directly with the Atlanta Braves team.
Right. It's with John Malone's Liberty Braves group.
Okay. And there was a time we could actually invest in the NBA's Boston Celtics, but that ended when the team was sold to a local investor group about 15 years ago. And the NFL's Green Bay Packers sold shares, but investors who have them, they can't trade them.
Yeah, that's right. They can give them to family members by rules. I'm sure on their own, they could give them to anyone they want, and the Green Bay Packers isn't going to come knocking on their door. But the only person who can vote You're able to vote on various fundraising ventures, essentially. The only ones who are able to vote are those who are registered with the shares. The value for most people is being able to put the stock certificate on their wall. And I noticed the certificates are for sale on eBay and Amazon. So pretty much anyone can get that.
So it sounds like it's a little bit more symbolic just to have a piece of Titletown and just the legacy and prestige of the Green Bay Packers.
Exactly. The sale of the shares does mean something to the team when they initially make it. The last one was six years ago because they're using that money for stadium upkeep and the like.
What happened when sports teams were publicly traded in the 1990s?
But to the shareholders, it doesn't mean much beyond the certificate and the psychological value.
We're speaking with The Wall Street Journal's contributor, Dan Weil, and you're listening to Your Money Matters from The Wall Street Journal. Welcome back, everybody. So Dan, there's an important lesson in your story in the journal, which is theme-based investing doesn't always perform well, and diversification really is the key. And that's the wise advice, whether you have an eye on sports or the automotive sector or anything.
Yeah, and it actually goes both ways with the diversification.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:02–0:26
2
Why are direct investments in professional sports teams rare on Wall Street?
0:26–3:37
3
What happened when sports teams were publicly traded in the 1990s?
3:37–4:42
4
Is there an ETF that gives investors exposure to professional sports?
4:42–5:32
5
Why do analysts say the Pro Sports Sponsors ETF (FANZ) isn’t a pure play on sports?
5:32–7:57
Speakers
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