toooskies wrote:jbk1234 wrote:Mavrelous wrote:Have you looked at the P/E ratio of NASDAQ top companies? Everyone said price wasn't justified in 2020, now the 2020 price is a bargain...
In this fiscal and monetary environment, no one can pretend to know, but Mark Walter can pretend better than Mavrelous and jbk...
How many of those companies have ever paid a dividend? Infinite growth is not a sustainable business model. Tesla currently has a P/E of 177 and only turned a profit due to the transferable tax credits the administration is getting ready to kill. Amazon has a market cap of $2.2T, a P/E of 34, and has never paid a dividend!
Now, you can stll make money by selling the stock for more than you bought it, but that entire business model is premised on the idea that you know when to sell and buy, and for that, you have to know how much more *growth* is likely, or even possible, and people don't genuinely calculate that anymore.
Well, this isn't exactly about turning a profit off of the Lakers, and sports franchise ownership isn't about profiting off the team. (I mean, yes, you profit off the team if you can. The Busses have done this for years. But that's secondary to the people buying teams now.)
First, you profit off of local TV. This is better in some markets than others, but LA is the prime TV market for basketball. The new ownership is primed to start their own broadcast distribution network exclusively broadcasting the Lakers and Dodgers and making a killing off of it. Own enough sports teams locally and globally and you effectively add more teams for "free".
Next, you profit off of real estate. You need to have enough spare money and expertise in the market to also own and develop real estate around the sports venues. This is why Cuban ostensibly sold his ownership stake in the Mavs-- he observed that the way to make the most money from the team is to let real estate players leverage the team relationships with the local landowners and governments to make massive profits. See Dan Gilbert getting a casino built in downtown Cleveland. Brooklyn, Golden State, and other teams have delivered massive profits from building up adjacent areas to their arenas. Southern California's real estate is particularly valuable for this kind of play.
Of course, while Cuban ostensibly sold his team because the new owners were in real estate, the new owners were also into gambling, and they're now using leverage of the team to make their own casino plays statewide in Texas.
Sports team ownership is no longer about just owning the team. It's about taking the team and reaping all the economic benefits that can be associated with it. Why enrich a whole community or city center around you when you can instead buy a community close to the city center, build a new city center, own the new city center, and reap the profits for yourself? Why not vertically integrate the team, the broadcast, the gambling sponsors of the broadcast, and the gambling itself into a mega-entity?
I get paying a modest premium if there are other financial benefits that will flow to the owner(s), but even accepting that framework there are two problems: (1) Other would-be investors are not going to agree to pay that premium so that YOU can realize those ancillary benefits. You're going to either cut other investors in or you're going to be writing all the checks yourself. (2) This isn't Haslam buying vacant land in Brook Park, or even Gilbert snapping up the empty Higbees building downtown. This is the Lakers in the Staples Center and I think you run into a similar problem with property values already being really high. How much has Balmer actually netted after laying out $2B for the Clippers?
