Successful Sports Franchises

Image Courtesy of the Associated Press. Image of what would have been the Los Angeles Rams/Chargers (NFL) Stadium in partnership with AEG and Farmers Insurance at L.A. Live.
Image Courtesy of the Associated Press. Image of what would have been the Los Angeles Rams/Chargers (NFL) Stadium in partnership with AEG and Farmers Insurance at L.A. Live.

Over the course of a sports franchise’s life, fans, players, journalists, and executives can recall when there were peaks of success and valleys of defeat.  As the National Basketball Association (NBA), National Hockey League (NHL), and Major League Soccer (MLS) playoffs have all ended with crowned champions, the National Football League (NFL) continues its regular season and the World Series for Major League Baseball (MLB) begins during a very interesting and complex pandemic season.  The short-term analysis would say that success comes in batches and a stroke of luck.  The long-term analysis would provide that success is methodical, developed, and sustaining even through the darkness of the valleys. 

Conventional and unconventional wisdom would provide that success in any business is a little bit of both.  Meaning, as the Roman philosopher Seneca spoke many years ago, “Luck is what happens when preparation meets opportunity.”  Namely, that a person and business put in the hard work so that when opportunity arises (e.g., luck) the person and/or business is prepared to rise to the occasion and succeed. 

As Sportico recently reported, there is a long-term need to invest in sports franchises because there are waves of success like the wave during a sporting or entertainment event.  Each section gets their turn through deliberate action.  Standing up and raising your hands much like taking the necessary steps to ensure successful execution. 

First, in defining success, there are two forms, on-the-field (which includes good public relations off-the-field) and dollars collected (running a positive cash balance).  There are fans who will attend games and support their team regardless of success.  However, the statistics show that the most success for franchises arrive when they win and/or do something else to attract fans to the ballpark, stadium, or arena. 

For example, the Colorado Rockies in baseball drew the most fans and dollars into their franchise coffers for their opening season (1993) and during the 2007 run to the World Series.  Teams that have built new stadiums generally have bulk years in terms of fans and dollars for the first year or two.  Obviously success on the field is the main driver and maintainer of success when combined with a good place to watch a game.  The Oakland Athletics, for example, have had winning teams make several postseasons, but still continue with low attendance numbers because fans prefer not to attend games at the Coliseum. 

Large fanbases and easy ingress and egress are also important.  The outliers are teams like the Los Angeles Dodgers and Dallas Cowboys who have admittedly large traffic, distance, and parking issues, but because of winning, a revitalized ballpark (or new with AT&T Stadium), and committed fans, they continue to lead the league in attendance and revenues.  Over in the MLS, LAFC has a new stadium and has played well since entering the league.  Compared to the LA Galaxy team, they have had fewer overall fans because of a smaller stadium capacity, but LAFC maintains over a 100% capacity and an increase in attendance year-over-year.  LAFC has an easy to reach train stop nearby and a wonderful venue to watch a soccer match.  It is also near downtown restaurants, a major university, and other entertainment. 

Of course, good branding, merchandise, social media, and community outreach can increase engagement, loyalty, and consumer spending.  A well-liked player or superstar can also increase attendance.  The aforementioned highlights the need for great drafting, player development, front office, and coaching personnel.  Sustained success on-and-off-the-field always comes down to talent and more importantly execution even if completed by less superior players than the opposing team and franchise.  Lastly, success leads to higher dollar amounts for broadcast rights to televising and streaming matches. 

The above may also be why fans invest in teams for the long-run, with the eventual hope of success.  Except with fans the pot of gold is emotional, while for sports franchise owners the reward (or loss) is financial, and emotional.  Investors of both emotional and financial resources should just remember that time is a friend when it comes to their return on investment.  However, some wait times are longer than others for the emotional aspect. 

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