It has been reported by numerous sources, including the New York Times DealBook, that Marc Lasry and Wesley Edens, both giants of the private equity (PE) industry, have agreed to purchase the Milwaukee Bucks basketball team. The Bucks are currently the worst team in the National Basketball Association (NBA). One might ask why savvy and successful investors would buy a team in such position, but Lasry and Edens have both made careers of revitalising underperforming assets.
Lasry is the Chief Executive of Avenue Capital Group, while Edens is the co-chariman of Fortress Investment Group. The deal is reported by DealBook to be in the region of $550 million, and represents personal investments from both parties, with no finance committed from either of their respective companies.
Whether they can translate their expertise and experience to the world of sports remains to be seen, particularly as numerous successful businessmen and women have tried to take their success into the sporting arena and failed in recent years.
What often happens is that successful businesspeople, quite naturally, try to run their sports team acquisitions as a business. However, business objectives don’t usually correlate with what teams followers want, which is wins and trophies. Dan Primack even wrote on the Fortune CNN blog about how private equity ownership in the NBA hadn’t improved the fortunes of four other teams.
What are the Buyers’ Plans for the Bucks?
One of the biggest trends in American sport that many others around the world struggle to understand is the moving of teams – or “franchises” as they are called – from one city to another, often moving states or even to the other side of the country.
Outgoing owner Herb Kohl stated in a press release related to the matter that Bucks followers had nothing to worry about on this front, and that the team would be staying in Milwaukee.
Wall Street finance firms and high profile individuals are likely to view this deal with interest, particularly as the buyers have stated quite openly they want to see the team winning the NBA Championship, adding in a statement, “Having each built competitive teams in the business world, we will apply that same intensity and determination as owners of the Milwaukee Bucks.”
It is thought that this deal will represent a welcome distraction and diversion for Lasry, who has admitted recently that he is looking to step back from some of his responsibilities in terms of investing at Avenue Capital.
The Appeal of American Sporting Franchises Basketball
Basketball isn’t the only American sport that attracts PE industry titans. While Primack focuses on NBA teams in his Fortune post, baseball and ice hockey are also popular ventures for wealthy businessmen and investors. Some choose to look abroad, too, with Malcolm Glazer, Ellis Short, and John W. Henry notable owners of football (soccer) teams in England, with variable success.