Why Sales of Professional Sports Teams Happen Privately and Quietly

In the high-stakes world of professional sports, the sale of teams, particularly minority ownership interests, is often shrouded in secrecy, with little to no public disclosure or media fanfare. This discreet approach is not a mere quirk of the industry but a deliberate strategy rooted in a complex interplay of strategic, regulatory, and practical considerations.

General partners, the controlling owners of sports franchises, are particularly sensitive to public exposure during these transactions, as it can impact team stability, reputation, and their ability to manage the process effectively. This essay explores the multifaceted reasons behind the quiet handling of sports team sales and the concerns driving general partners’ preference for minimal publicity, supported by examples and industry insights.

Understanding Minority Ownership Interests

Before delving into the reasons for discretion, it’s essential to clarify what minority ownership interests entail. In professional sports, teams are often owned by a combination of individuals, partnerships, or entities, with a general partner or controlling owner holding the majority stake and decision-making authority. Minority owners, who typically hold smaller, non-controlling stakes (often less than 30%), have limited influence over team operations and usually serve in advisory roles rather than controlling boards (Observer).

These stakes are attractive to investors seeking prestige, tax benefits, or the thrill of partial ownership without the responsibilities of management. However, the sale of these stakes, unlike majority ownership transfers, often flies under the radar, raising questions about why such transactions are handled so quietly.

Reasons for Discreet Sales

The discreet nature of sports team sales, particularly for minority stakes, can be attributed to several key factors, each addressing specific concerns of general partners and the broader sports ecosystem.

1. Control Over Buyer Selection

One of the foremost reasons for keeping sales private is the desire of general partners to maintain strict control over who becomes a co-owner of the team.

The identity and alignment of new owners are critical, as they can influence the team’s culture, community ties, and long-term strategy, even in a minority capacity. By conducting sales discreetly, general partners can carefully vet potential buyers, ensuring they share the team’s vision and values without attracting unsolicited bids from parties who may not be a good fit.

A notable example is the 2023 sale of a 25% stake in the Milwaukee Bucks by co-owner Marc Lasry to Jimmy and Dee Haslam. The transaction, valued at $800 million, was structured to ensure that the Haslams were committed to keeping the team in Milwaukee and supporting its championship aspirations. The Bucks’ ownership group emphasized the Haslams’ respect for the team’s “impressive history of basketball in Milwaukee and the passionate and loyal fan base” (Forbes). This careful selection process, facilitated by a private sale, underscores the importance of aligning new owners with the team’s goals, a task made easier without public scrutiny or competing bids.

2. Avoiding Negative Publicity and Speculation

Public announcements of ownership sales, even for minority stakes, can trigger speculation about the team’s financial health or stability, potentially damaging its reputation and business operations.

General partners are acutely aware that such rumors could lead to reduced ticket sales, hesitant sponsors, or even player uncertainty, all of which can undermine the team’s performance and market value. By keeping sales under wraps, owners mitigate the risk of negative publicity and maintain the team’s image as a stable, thriving entity.

Moreover, discreet sales help avoid the risk of attracting controversial buyers whose involvement could generate adverse media attention.

For instance, if a minority stake were sold to an individual with a questionable reputation, it could reflect poorly on the team, even if the buyer has no control over operations. The private nature of these transactions allows general partners to vet buyers thoroughly, ensuring that new owners enhance rather than detract from the team’s public image. This concern is particularly relevant in an era where media scrutiny is intense, and public perception can significantly impact a team’s brand.

3. Streamlining League Approval Processes

Professional sports leagues impose stringent regulations on ownership transfers, requiring approval from governing bodies such as the NBA’s Board of Governors or the NFL’s ownership committee. For example, the NFL mandates that any transfer of ownership interest, including minority stakes, be approved by a ten-twelfths vote of its owners (PBS).

These approval processes involve rigorous vetting of new owners for financial stability, absence of conflicting interests (e.g., gambling affiliations in the NFL), and alignment with league standards.

Conducting sales discreetly facilitates a smoother approval process by allowing negotiations and vetting to occur without public interference or media pressure. Public disclosure could invite external commentary or lobbying that complicates the league’s decision-making, potentially delaying or derailing the transaction.

By keeping the process private, general partners can present a unified front to the league, ensuring that the proposed buyer meets all criteria and that the approval process proceeds efficiently.

4. Preserving Privacy of Financial Dealings

As privately held entities, professional sports teams are not subject to the same disclosure requirements as publicly traded companies. This inherent privacy allows owners to conduct financial transactions, including the sale of ownership stakes, without publicizing the details. According to sports industry expert Marc Ganis, president of SportsCorp LLC, “They’re not really transparent, because they’re private and not public entities” (Observer). This lack of transparency is a deliberate choice, reflecting owners’ preference to keep their financial strategies and personal dealings confidential.

For general partners, maintaining privacy is not only a matter of personal preference but also a strategic advantage. Publicizing sales could reveal sensitive financial information, such as the team’s valuation or the owner’s liquidity needs, which could weaken their negotiating position in future transactions or attract unwanted attention from competitors or investors.

By handling sales quietly, owners safeguard their financial privacy and maintain control over the narrative surrounding the team’s ownership structure.

5. Minimizing Disruption to Team Operations

Professional sports teams thrive on stability, both on and off the field. Public knowledge of ownership changes, even for minority stakes, can create uncertainty among fans, players, and staff, potentially disrupting team dynamics and community support. Fans may worry about the team’s future direction or relocation, while players and coaches might question the organization’s commitment to success. General partners are sensitive to these risks and strive to keep the focus on the team’s performance rather than its ownership structure.

By managing sales discreetly, owners ensure that the team’s operations remain unaffected, preserving the morale of players and the loyalty of fans. This is particularly critical for teams with passionate fan bases, where any hint of instability could erode trust and engagement.

For example, the Milwaukee Bucks’ ownership group emphasized continuity in their statement about the Haslam sale, noting that the transaction would not impact the team’s on-court product, with key figures like Giannis Antetokounmpo and coach Mike Budenholzer remaining in place (Forbes). Discreet sales help maintain this sense of continuity, ensuring that the team’s focus remains on winning rather than ownership transitions.

Additional Considerations

Beyond these primary reasons, there are additional factors that contribute to the discreet nature of sports team sales. For instance, the logistical complexity of managing multiple owners can be a concern for leagues and general partners.

According to Marc Ganis, leagues like the NBA and MLB are more comfortable with large ownership groups than the NFL, which prefers a single controlling owner to reduce “logistical headaches” (Observer). Discreet sales allow general partners to manage these complexities privately, negotiating terms and ownership structures without public oversight.

Furthermore, the financial motivations behind selling minority stakes can also encourage discretion.

In some cases, owners may sell stakes to raise liquidity, particularly during economic downturns, as noted in a 2020 CNBC article discussing how the COVID-19 pandemic prompted owners to offer shares to offset revenue losses (CNBC). Publicizing such sales could signal financial weakness, potentially lowering the team’s valuation or deterring future investors. By keeping these transactions private, owners can maintain the perception of financial strength and stability.

Case Study: Milwaukee Bucks Minority Stake Sale

The 2023 sale of Marc Lasry’s 25% stake in the Milwaukee Bucks to Jimmy and Dee Haslam provides a compelling case study of how these principles play out in practice. The transaction, valued at $800 million and implying a $3.2 billion team valuation, was publicly announced, likely due to its significant size and the need to reassure fans and stakeholders about the team’s continuity in Milwaukee (ESPN).

However, the deal’s negotiation and initial agreement were handled privately, allowing the Bucks’ ownership group to select buyers who aligned with their vision of maintaining a championship-caliber organization.

The announcement emphasized the Haslams’ commitment to the team’s success and their respect for Milwaukee’s basketball heritage, illustrating the importance of buyer alignment. The sale required approval from the NBA’s Board of Governors, a process that was likely facilitated by the private negotiations that preceded the public announcement. This case highlights how even public sales begin with discreet negotiations to ensure control, stability, and league compliance, with public disclosure occurring only when necessary to maintain transparency with fans and the league.

Broader Implications

The discreet handling of sports team sales reflects broader trends in the sports industry, where teams are increasingly viewed as valuable assets with complex financial and cultural implications. The skyrocketing valuations of franchises, driven by lucrative media deals and limited supply, have made ownership stakes highly sought-after investments (Sports Business Journal).

However, with this increased value comes greater scrutiny, making discretion a critical tool for managing ownership transitions.

For general partners, the sensitivity to public disclosure is not just about protecting their own interests but also about safeguarding the team’s legacy and community ties. In an industry where fan loyalty and public perception are paramount, the ability to manage ownership changes quietly is a strategic advantage that ensures the team remains a source of pride and success for its stakeholders.

Conclusion

The sale of professional sports teams, particularly minority ownership interests, is conducted discreetly for a variety of interconnected reasons. General partners prioritize control over buyer selection to ensure alignment with the team’s vision, as seen in the Milwaukee Bucks’ sale to the Haslams. They aim to avoid negative publicity and speculation that could harm the team’s reputation or financial standing, preserving stability for fans, players, and sponsors.

League regulations, such as the NFL’s approval requirements, encourage private handling to streamline the vetting process. The inherent privacy of sports teams as private entities allows owners to keep financial dealings confidential, while discreet sales minimize disruptions to team operations.

Together, these factors create a compelling case for why general partners are so sensitive to public disclosure and why sales are handled with minimal media attention. By managing these transactions behind closed doors, owners protect the team’s integrity, value, and community standing, ensuring that ownership changes enhance rather than undermine the franchise’s success. As the sports industry continues to evolve, the discreet sale of ownership interests will remain a critical strategy for navigating the complex landscape of professional sports ownership.