Sports Teams: Investing in Prestige, Passion, and Power
The Million Dollar Question: Steve Ballmer paid a then-record $2 billion for the Los Angeles Clippers in 2014. According to a ProPublica investigation, roughly how much did owning the team help him save in taxes?
A) Nothing — the team is profitable B) About $14 million C) About $140 million D) About $1.4 billionRead on for the answer.
Buying a professional sports team is one of the strangest purchases in the world of big money. On paper it can look like a terrible investment — huge price, thin annual profit, endless headaches. Yet the richest people on earth keep lining up to pay record sums for the privilege. This piece explains what a franchise actually is as an asset, who buys them, why, what they cost, and the part almost everyone gets wrong.
What it is
A professional sports team is not just a business that sells tickets and jerseys. It is a membership in a closed club. Each major league — the NFL, NBA, MLB, NHL — operates as a cartel that controls exactly how many teams exist, who is allowed to own one, and how the shared television money gets divided. When you buy a team, you are buying a permanent seat at that table.
The defining feature is scarcity. There are only 32 NFL franchises and 30 NBA franchises, and the leagues expand slowly and reluctantly. New teams appear once a decade or two, not once a year. Most existing owners hold on for generations, so in any given year only one or two teams might actually change hands. That artificial shortage — a fixed supply of trophies and a growing line of billionaires who want one — is the single most important fact about the whole category. It is why a franchise can sell for a price that looks detached from what the underlying business earns.
The other defining feature is visibility. Almost no other asset a wealthy person can own comes with a stadium full of fans, a spot on the local news every night, and a place in the emotional life of an entire city. A team is a business, a piece of civic infrastructure, and a personal identity all at once.
Who uses it
Buyers fall into a few distinct bands, and it is worth separating them rather than lumping everyone together as “rich people who like sports.”
At the entry level are minority-stake and institutional investors, who buy single-digit-percentage slices without any say in how the team is run. Until recently this meant wealthy individuals; since 2024 it increasingly means private-equity firms. These investors are buying exposure to the asset class, not a courtside identity.
In the middle are control owners built on a regional or single-industry fortune — net worth in the $1 billion to $10 billion range. They can afford one team, usually in their home market, and the purchase represents a large share of their total wealth. For them the team is genuinely a big bet.
At the top are the mega-owners, for whom even a $6 billion or $10 billion team is a slice of a much larger fortune. Steve Ballmer, who owns the Clippers, is worth well over $100 billion according to Forbes. Rob Walton, who led the group that bought the Denver Broncos, had a net worth Forbes estimated at $59 billion at the time of the deal. Mark Walter, the new controlling owner of the Los Angeles Lakers, also controls the Dodgers. What unites this band is that they were already billionaires long before they bought a team — sports ownership is a destination for existing wealth, not a way to build it. A growing number even become serial owners: Walter’s group bought the Dodgers in 2012 for $2 billion, and had been a Lakers stakeholder for years before taking control. Josh Harris owns the Commanders, the NBA’s Philadelphia 76ers, and the NHL’s New Jersey Devils. At this level a team is a piece of a portfolio, not a single reckless bet.
Why they use it
The honest answer is a stack of reasons, and dividends are near the bottom.
The first is scarcity itself. When something almost never comes up for sale and everyone with the money wants it, competition drives the price past what the cash flows justify. As one valuation analysis put it, the limited supply of teams and the growing number of would-be buyers means sale prices routinely land in excess of what the underlying economics would suggest.
The second is status and access. Owning a team is a passport into rooms that money alone cannot open — the owners’ box, the league meetings, the celebrity friendships, the phone calls that get returned. JPMorgan’s private bank has described sports teams as the trophy asset billionaires now prize above art and cars.
The third is legacy and permanence. A franchise can outlive its owner, its owner’s business, and several economic cycles. Families hold them for decades — the Buss family owned the Lakers for 46 years before the recent sale, having bought the team in 1979 for $67.5 million. A team is a way of stamping a name onto a city permanently.
There is also civic power. A team is leverage in a city: owners negotiate with mayors and governors over stadium financing, zoning, and public subsidies, and a franchise gives its holder a standing platform in local — and sometimes national — affairs that a private company never would. The team becomes a lever, not just a possession.
And the fourth reason, quietly, is that the returns turned out to be real. Across the four major leagues, franchise values have compounded at roughly 14.4% a year over the past two decades, comfortably ahead of the S&P 500’s roughly 10.7%. The passion project quietly became one of the best trades of the era.
How it works
You cannot simply buy a team the way you buy a house. Every sale has to be approved by the other owners in the league, usually by a supermajority vote, and the buyer is vetted for wealth, character, and how they intend to finance the deal. The leagues are protecting the value of their own memberships, so they care a great deal about who joins.
It helps to understand where the money actually comes from. The biggest engine is national media rights — the league sells its games to television and streaming partners as a package and splits the proceeds among all its teams, so even a small-market club shares in the windfall. That shared, contractually guaranteed revenue is what makes the asset so stable, and it keeps growing with each new broadcast deal. On top of it sit local revenue streams: tickets, luxury suites, sponsorships, and the stadium itself. The Dallas Cowboys’ most recent season revenue surpassed $1.2 billion, more than any other team in any sport — a measure of how far a franchise’s earning power can run beyond the league’s shared pool.
Ownership comes in two very different forms. A control sale transfers the majority stake and the right to run the team — hire the executives, negotiate the leases, sit in the league’s governing body. A minority stake is a passive slice with no operational power. The two are priced differently: control commands a higher price, and minority positions often trade at a discount because they are illiquid and carry no votes. Control can also be phased in: the Celtics sale was structured so that Bill Chisholm’s group takes at least 51% first and moves to full control by 2028, at a price that could bring the franchise’s total value to $7.3 billion.
The newest development is the arrival of institutional capital. In August 2024, NFL owners voted 31–1 to allow approved private-equity firms to buy up to 10% of a team — the last of the major U.S. leagues to open its doors to funds. The league pre-approved a short list including Arctos Partners, Ares Management, and Sixth Street, with strict rules: a fund can hold no more than 10% of a team, must commit to a multi-year hold, and cannot spread across more than six teams. The first deals closed within months, with Ares taking 10% of the Miami Dolphins at an $8.1 billion valuation and Arctos taking 10% of the Buffalo Bills. The point of these deals is not control; it is to give existing owners a way to turn a slice of an illiquid trophy into cash without selling the whole team — and each transaction sets an “implied” valuation that lifts the paper worth of every other franchise in the league.
Leagues also mint new value through expansion. In March 2026 the NBA’s Board of Governors voted unanimously to explore adding teams in Seattle and Las Vegas, with the expansion fee expected to start around $6 billion and possibly climbing higher. That money gets split among the current owners — a check of at least $650 million each, before any bidding war pushes the number up. Adding two teams is, in effect, the existing club selling two new memberships and pocketing the proceeds.
What it costs
The price ladder runs from a few percentage points of a team all the way up to eleven figures, and the top rungs have risen sharply.
At the summit of the value tables, the Dallas Cowboys were ranked by Forbes as the world’s most valuable team at $13 billion in its 2025 list, followed by the Golden State Warriors at $11 billion, the Los Angeles Rams at $10.5 billion, the New York Giants at $10.1 billion, and the Lakers at $10 billion. These are estimates of what the teams would fetch, not sale prices.
Actual recent sales tell the same story. The Boston Celtics sold in 2025 for a record $6.1 billion to an investor group led by Bill Chisholm, edging past the Washington Commanders, which Josh Harris’s group bought for $6.05 billion in 2023. The Lakers were sold to Mark Walter at a $10 billion valuation, the highest ever for a U.S. franchise. The Denver Broncos went for $4.65 billion in 2022.
To feel the trajectory, compare purchase prices a generation apart. Dan Snyder bought the Commanders for $800 million in 1999, and the franchise sold for $6.05 billion 24 years later. Jerry Buss bought the Lakers for $67.5 million in 1979; the family sold at a $10 billion valuation. These are not typos — they are the compounding effect of scarcity meeting rising television money over decades, and they are why so many owners treat the eventual sale, not the annual profit, as the real payday.
The appreciation is where it gets striking. Ballmer paid $2 billion for the Clippers in 2014, a number many thought was wildly high at the time; Forbes now values the team at $5.5 billion. Mark Cuban bought the Dallas Mavericks for about $285 million in 2000 and later sold a 72.3% stake to the Adelson family at a $3.5 billion valuation. Measured over decades the gains dwarf the broader market — the Broncos sold for roughly 5,861% more than their 1984 price, against a 3,083% rise in the S&P 500 over the same stretch.
Hidden costs and tradeoffs
The sticker price is only the beginning. Teams are deeply illiquid — you cannot sell a slice on a Tuesday afternoon, and even finding a buyer for a whole franchise can take a year of league vetting. Minority investors face capital calls, meaning the controlling owner can require them to chip in more money for stadium projects or operating shortfalls, and their stakes trade at a discount precisely because they have no control and no easy exit.
Then there is the stadium. Arenas and stadiums are enormous separate expenses, and increasingly owners are paying for them privately. Ballmer spent roughly $2 billion of his own money building the Clippers’ Intuit Dome — on top of the $2 billion he paid for the team itself.
Owners also trade privacy for a permanent public role. A team owner is a civic figure whose decisions — a coach firing, a ticket-price hike, a losing season — are debated by millions and dissected in the press. The previous Commanders owner, Dan Snyder, sold the team after years of investigations and public pressure. The scrutiny extends to money, too: when owners seek public financing for a new stadium, the debate over subsidies plays out in front of taxpayers, and the tax advantages of ownership have drawn attention from the IRS and journalists alike.
And on a pure cash basis, many teams distribute little or nothing to owners year to year; the reward is designed to arrive at the eventual sale, not as an annual check. That is a real tradeoff for a buyer who wants income rather than a long-term store of value — the money stays locked in the asset until the day it is sold, which could be decades away or handed to the next generation instead.
What people get wrong
The biggest misconception is that owning a team is a money pit — a rich person’s expensive hobby that bleeds cash. The truth is more interesting, and it runs through the tax code.
Under a provision expanded by the American Jobs Creation Act of 2004, a buyer can treat almost the entire purchase price of a team as intangible assets — player contracts, media deals, goodwill — and write that value down over about 15 years, even though the team itself is usually appreciating. ProPublica’s investigation found that from 2014 to 2018 Ballmer reported about $700 million in losses from the Clippers — largely paper losses — during years the team was often actually profitable. Those losses helped him save an estimated $140 million in taxes, and in 2018 he reported income to the IRS at a federal rate of just 12%. A “money-losing” team can quietly make its owner richer. (For the mechanics behind write-downs like this, see our piece on how the wealthy structure taxes.)
The second misconception is that a minority stake is like owning the team. It is not. A passive slice buys you exposure to the asset’s appreciation and a nice line at dinner parties, but no votes, no control, and no easy way out.
The third is that ownership is mainly about winning championships. Winning helps the brand, but the value engine is the league’s shared media money, the scarcity of memberships, and the tax and appreciation math — not the trophy case. The Clippers had never reached a conference final when Ballmer paid a record price for them, and the team’s value still nearly tripled. Plenty of teams that rarely win are worth billions.
A fourth thing people miss is how much influence an owner can quietly keep even after “selling.” When Mark Cuban sold his majority stake in the Mavericks, he said he expected to keep running basketball operations — a reminder that these deals are negotiated one at a time, and that price, control, and day-to-day power do not always move together. In sports ownership, who signs the checks and who actually runs the team can be two different answers.
Bottom line
The Million Dollar Question asked how much Steve Ballmer saved in taxes thanks to the Clippers. The answer is C — about $140 million, according to ProPublica, generated largely by writing down the team’s intangible value on paper even as the franchise’s real worth more than doubled.
That single fact captures the whole category. Buying a sports team looks like the purest vanity spend in the world of wealth, and the ego and passion are real. But underneath the trophy is a hard financial logic: a permanently scarce asset, a tax code that rewards the purchase, shared league revenue that keeps climbing, and a resale market where the next billionaire is always waiting. It is, in the end, less a passion project than a control-and-scarcity play — one that happens to come with the best seats in the house.
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