When hedge fund titan Steven A. Cohen bought the New York Mets for $2.47 billion in November, it set a new record for the sale price of a U.S. pro sports team—and it happened amid a global pandemic.
COVID-19 forced all the major U.S. sports leagues to hit pause last March, and once they came back in various formats (the NBA and WNBA in a bubble with no fans, NHL in two bubbles in two cities, MLB for a blunted 60-game season with cardboard cutouts in the stands), many of them saw big losses in revenue. Major League Soccer lost $1 billion, the NBA lost $1.5 billion, and MLB lost more than $3 billion.
Even with vaccines now on the way, some experts fear it could take years for in-game attendance to return to pre-pandemic levels, and that will hurt MLB and MLS, leagues that are particularly reliant on ticket revenue, more than the NFL, which gets the bulk of its money from TV rights.
But don’t expect pro franchise values to plummet due to the pandemic. So says Alan Smolinisky, the newest minority owner of the LA Dodgers.
“As someone who allocates capital all day long, it’s not a bad place to have money right now anyway,” Smolinisky told Yahoo Finance in an extensive interview. “Not only have values increased, but it’s a real finite resource, right? There are 30 MLB teams. We’ve seen one deal go down since the pandemic started, Steve Cohen’s Mets, and we did not see a decrease in value there. It’s such a finite resource, and there are so many people that want to be a part of it, I actually think it will turn out to be an incredible investment. I’m very bullish long-term on the values, and I’d be very surprised if anything, at least in the NBA, NFL, and MLB, were to trade at any discount.”
Cohen’s record-setting Mets purchase didn’t even include the team’s regional sports network, SNY, and it still topped the previous record MLB sale ($2.15 billion for the Dodgers in 2012 to Guggenheim Partners) and the overall record team sale in any U.S. league ($2.35 billion for the Brooklyn Nets just last year to Alibaba exec Joe Tsai, though he bought it in two parts).
To be fair, Smolinisky prefaced his prediction about franchise values by saying that his Dodgers stake was a “vanity purchase” he made because the team is “like religion to my family,” not an investment vehicle.
The son of Argentinian immigrants, Smolinisky grew up a diehard Dodgers fan because his father, who came to Los Angeles in 1963, learned English from listening to Dodgers broadcaster Vin Scully on the radio. “My love for this team goes way back to even before I was born,” Smolinisky says. He made his money in real estate, beginning with a leasing business, Conquest Student Housing, that he launched with his landlord Brian Chen while he was still an undergrad at the University of Southern California. In 2013, he bought his local newspaper, the Palisadian Post.
Smolinisky and Robert Plummer became the newest minority owners of the Dodgers last year, when they (separately) bought what has been reported as a combined 5% stake, though Smolinisky cautions that he has never confirmed the percentage.
His timing was impeccable.
The team announced the two newest members of its ownership group in September 2019, shortly before the Dodgers would lose to the Washington Nationals in the World Series. The 2020 pandemic-shortened season was his first full season as an owner, and he argues that winning a title during the pandemic season meant more, not less.
“I think very early on, it was clear that this ring would mean more than ever,” Smolinisky says. “The amount of challenges, the strangeness of playing in an empty stadium, the constant testing, being apart from your family, having some players opt out... The amount of sacrifice and hard work and everything that went into it, I think it just makes it more special.”
Dodgers CEO Stan Kasten said on CNBC in October that the franchise lost “north of $100 million” in revenue from the pandemic season, and that “it’s going to take years to catch up.”
Even beyond the pandemic, MLB faces existential challenges. Attendance has been in decline for years, and dropped to a 16-year low in 2019. The Dodgers were a shining exception: the team had the best attendance in baseball in 2019 and its average rose as MLB’s average fell.
Still, the league’s 30 franchises have a lot of concerns in 2021, beginning with the need to get bodies in seats to claw back ticket revenue. And live sports viewership is seeing dramatic declines across the board that can’t all be chalked up to the pandemic or the 2020 presidential election.
“It’s been absolutely devastating from the revenue perspective,” Smolinisky says. “But this is really a challenge I see in all of our businesses, everything has really been disrupted. I would even put that on the NFL too, they’ve seen major rating decreases, and they come up with all sorts of wacky — ‘Well, it was the anthem,’ then they fight with their pizza sponsor... they have a lot of challenging issues, but we all do, we’re all competing for everyone’s attention for entertainment, and there’s a lot of different options... the league recognizes it, they’re trying to speed up the game, they’re changing rules a little bit without compromising the core of it. But just like every business, you have to compete, stay relevant, and stay fun and interesting.”
Daniel Roberts is an editor-at-large at Yahoo Finance and specializes in sports business. Follow him on Twitter at @readDanwrite.