Glass selling the Royals. Look at this quote from the mlb.com article:
"Glass was the hand-picked successor to run the Royals after the team’s original owner, Ewing Kauffman, died in 1993. Glass oversaw Kauffman’s succession plan, which mandated that the proceeds from a sale of the club went directly to charity. Glass, after an unsuccessful attempt to find other suitable owners, purchased the team himself for $96 million in 2000."
If we believe Joe's story, quite a lot of spin from the folks at mlb.com...
Dayton Moore was an awful GM, is an awful GM, and I remain disgusted that the bloody ROYALS won a World Series before the infinitely better ran Tigers. twins, and yes, Indians. It is a true baseball story that the crappy a White Sox and Royals both won rings before the three behemoths of their division.
I wonder if Walmart was thought of differently 20 years ago, because it seems like the Walmart CEO is the antithesis of what you would want in an MLB owner.
"He put together this massive ownership group that included local celebrities such as Buck O’Neil and golfer Tom Watson and Ewing Kauffman’s daughter-in law Nancy."
Hi Joe, good story, but Steve Martin's old bit was "how to be a millionaire and not pay taxes." Step 1 was get a million dollars
I always wondered about the crazy escalation of the value of teams. Is it because the teams are really worth that much money as a profit making enterprise or is there a bit of "I want to own a baseball team" the same way that someone may say "I want to own a Rembrandt"?
In other words, Glass be looking at a billion dollar profit by selling the team, but he couldn't afford the to pay a $200 million payroll unless he sold the team to get it, which he can't do and still own the team.
There might be a status similarity, but there are differences also. I mean, I saw a painting sell to an individual at an auction house for $400 million. First, I can't imagine said painting will be worth over $4 billion in 20 years, but maybe it will. But even if it is, the only way to make that money is to sell it - and I imagine the insurance prices on a painting worth that much for 20 years would eat into the profit quite a bit.
With the prices teams are going for now, this is true for baseball teams now as well. You are not going to make all your money back without selling it. Team's valuations are rising much faster than profits. In that way, for most owners, it is an expensive toy. But they do make some money. Average profits this year for teams is close to $40 million. But at a billion dollars that would be 25 years to make your money back, and the Royals, while they are a profitable enterprise, do not make the average MLB profit.
Glass was not in that situation, though. First he bought a team valued at $122 million for $96 million. That is more than 20% off. Then the team's value went up an average of 11.7% a year for 19 years. Already a great investment at zero profit. But along the way, he made about $170 million before the sale. He made his initial investment back years ago.
Is an investment that compounds at 11.7% per year a "greet investment?" The S&P 500 has its ups and downs, but over the long course of history, it has averaged pretty close to 10% per year. 11.7% is certainly better than 10%, but it isn't exactly a Warren Buffett-like history. I'll assume you are right about the "he made $170m" before the sale (I haven't seen those figures elsewhere, but I'm not 100% well versed on it either) but that would be roughly a 9% annual dividend, well above market post 2008, but not junk bond status for the two decade period.
Maybe it's not a great investment, but it's not a loss leader either. Presumably, there is some status in owning a professional sports team besides pure profit. In this case, Glass also is making a lot of money. Nothing wrong with that except that he basically ran the team into the ground for decades. It's not as if Connie Mack is buying these teams, people who depend on profit from the team for their livelihood. And the players' salaries are part of the cost of doing business in a market economy. If the profit isn't enough for you, don't get into the industry.
Glass selling the Royals. Look at this quote from the mlb.com article:
"Glass was the hand-picked successor to run the Royals after the team’s original owner, Ewing Kauffman, died in 1993. Glass oversaw Kauffman’s succession plan, which mandated that the proceeds from a sale of the club went directly to charity. Glass, after an unsuccessful attempt to find other suitable owners, purchased the team himself for $96 million in 2000."
If we believe Joe's story, quite a lot of spin from the folks at mlb.com...
Dayton Moore was an awful GM, is an awful GM, and I remain disgusted that the bloody ROYALS won a World Series before the infinitely better ran Tigers. twins, and yes, Indians. It is a true baseball story that the crappy a White Sox and Royals both won rings before the three behemoths of their division.
I wonder if Walmart was thought of differently 20 years ago, because it seems like the Walmart CEO is the antithesis of what you would want in an MLB owner.
"The last of these ended with Crawford playing out his contract with the Dodgers.:
How long have you been sitting on that joke? Years?
"He put together this massive ownership group that included local celebrities such as Buck O’Neil and golfer Tom Watson and Ewing Kauffman’s daughter-in law Nancy."
So there were TWO Nancy's in the mix?
Hi Joe, good story, but Steve Martin's old bit was "how to be a millionaire and not pay taxes." Step 1 was get a million dollars
I always wondered about the crazy escalation of the value of teams. Is it because the teams are really worth that much money as a profit making enterprise or is there a bit of "I want to own a baseball team" the same way that someone may say "I want to own a Rembrandt"?
In other words, Glass be looking at a billion dollar profit by selling the team, but he couldn't afford the to pay a $200 million payroll unless he sold the team to get it, which he can't do and still own the team.
There might be a status similarity, but there are differences also. I mean, I saw a painting sell to an individual at an auction house for $400 million. First, I can't imagine said painting will be worth over $4 billion in 20 years, but maybe it will. But even if it is, the only way to make that money is to sell it - and I imagine the insurance prices on a painting worth that much for 20 years would eat into the profit quite a bit.
With the prices teams are going for now, this is true for baseball teams now as well. You are not going to make all your money back without selling it. Team's valuations are rising much faster than profits. In that way, for most owners, it is an expensive toy. But they do make some money. Average profits this year for teams is close to $40 million. But at a billion dollars that would be 25 years to make your money back, and the Royals, while they are a profitable enterprise, do not make the average MLB profit.
Glass was not in that situation, though. First he bought a team valued at $122 million for $96 million. That is more than 20% off. Then the team's value went up an average of 11.7% a year for 19 years. Already a great investment at zero profit. But along the way, he made about $170 million before the sale. He made his initial investment back years ago.
Is an investment that compounds at 11.7% per year a "greet investment?" The S&P 500 has its ups and downs, but over the long course of history, it has averaged pretty close to 10% per year. 11.7% is certainly better than 10%, but it isn't exactly a Warren Buffett-like history. I'll assume you are right about the "he made $170m" before the sale (I haven't seen those figures elsewhere, but I'm not 100% well versed on it either) but that would be roughly a 9% annual dividend, well above market post 2008, but not junk bond status for the two decade period.
Maybe it's not a great investment, but it's not a loss leader either. Presumably, there is some status in owning a professional sports team besides pure profit. In this case, Glass also is making a lot of money. Nothing wrong with that except that he basically ran the team into the ground for decades. It's not as if Connie Mack is buying these teams, people who depend on profit from the team for their livelihood. And the players' salaries are part of the cost of doing business in a market economy. If the profit isn't enough for you, don't get into the industry.