[UPDATE: Jeb Bush eventually dropped out of the Marlins sale process, and in August 2017, it was reported that the team will sell to a group led by Bruce Sherman and Derek Jeter.]
Derek Jeter and Jeb Bush want to buy the Miami Marlins. The New York Yankees alum and the Florida politician are part of an investment group that has agreed to a sale price of $1.3 billion, according to reports on Tuesday from Bloomberg and from the Miami Herald. That’s pending their ability to raise additional financing.
Wait a minute: $1.3 billion for a franchise that lost money last year, hasn’t made the playoffs in 14 years, and doesn’t play in a top-10 media market?
Absolutely.
While many will say that Jeter and Jeb would be overpaying for the Marlins, buyers these days are happy to pay more for a sports team than many say it’s worth. Of course no investment is ever guaranteed, but over the past 50 years, American pro sports teams have been one of the few investments nearly guaranteed to grow in value—and grow fast.
Marlins owner Jeff Loria bought the Marlins for a mere $156 million in 2002. At a sale price of $1.3 billion, he’d get a 733% return on his initial investment after 15 years of ownership. Frank McCourt, the former LA Dodgers owner, sold his team even faster: he bought in 2004 and sold the team eight years later to Guggenheim Partners (and Magic Johnson) for $2.15 billion (a 400% return on his $430 million purchase price). Donald Sterling, who bought the LA Clippers for $12 million in 1981, got a 16,000% return when he sold to former Microsoft CEO Steve Ballmer for $2 billion.
“The Clippers are worth nowhere near what Ballmer is paying,” wrote sports economist Andrew Zimbalist at the time. Indeed, it was the $2 billion tag for the Clippers, in 2014, that appeared to usher in a new era of eye-popping team sales. But the trend was already happening well before then.
In fact, the most recent 15 teams to sell, among the ‘big three’ leagues (NFL, NBA, MLB), have all fetched price tags that shattered their Forbes valuation at the time, a sign that the market has deemed nearly any pro team extremely valuable, regardless of media market size and win-loss record. (You could also say it shows the silliness of ballparking the value of a sports team, but nonetheless, the Forbes valuations are widely treated as the de facto best-guess.)
For reference, Forbes earlier this month pegged the Marlins at $940 million, ranking them 25th out of baseball’s 30 teams. And yet, the sale will top $1 billion. (And Loria wanted even more, reportedly: $1.6 billion.)
Jeter and Jeb are willing to spend this much for the Marlins because they’ve seen the obvious: the market has proven that it’s a great investment. They could likely turn and around and re-sell the team for more money as soon as they want.
Here are the sales figures of the 14 teams to sell most recently before the Marlins, in descending chronological order. We’ve bolded the new sale price, the Forbes valuation at the time of the sale, and the previous sale price, to underscore how much the money has multiplied in each case.
Seattle Mariners, Aug. 2016
Western Wireless founder John Stanton and a large group investors bought a 90% share of the Mariners for $1.26 billion, valuing the full team at $1.4 billion, a good $200 million more than the 2016 Forbes valuation of $1.2 billion. Nintendo, led by president Hiroshi Yamauchi, bought the team for $125 million in 1992.
Brooklyn Nets, Dec. 2015
Russian billionaire Mikhail Prokhorov bought the Nets and Barclays Arena for $1.7 billion, when Forbes had recently valued the team right around that, at $1.6 billion. Real estate developer Bruce Ratner had paid $300 million for the team in 2004. Prokhorov is reportedly already looking to sell off a 49% stake in the team.
Atlanta Hawks, June 2015
Tony Ressler, chairman of private equity firm Ares Management, bought the Hawks for $850 million with a group that included NBA alum Grant Hill. Forbes, in its valuations from just six months before, estimated the team at $825 million. Atlanta Spirit had bought the team from Time Warner for $250 million in 2004.
Buffalo Bills, Sep. 2014
Five months after Bills owner Ralph Wilson died, Terry and Kim Pegula, owners of the Buffalo Sabres NHL team, bought the team for $1.1 billion, a new record for an NFL team. Forbes had placed the Bills as their second-least-valuable franchise, at $935 million. Wilson had been the team’s founding owner in 1960.
LA Clippers, June 2014
After tape emerged of Donald Sterling making offensive comments about his players, the NBA forced Sterling to sell; he still made jaw-dropping profit in the $2 billion sale to Steve Ballmer. The sale price more than tripled the Forbes valuation of $575 million for the team that Sterling got for just $12 million in 1981.
Milwaukee Bucks, Apr. 2014
The hedge fund duo of Wesley Edens and Marc Lasry paid $550 million to buy the Bucks, valued then at $405 million, from former Wisconsin senator Herb Kohl, who bought the team in 1985 for just $18 million. The Bucks sale set a new record for an NBA team, but no one could know that just months later, the Clippers price tag would nearly quadruple it.
Sacramento Kings, May 2013
Tech entrepreneur Vivek Ranadive, a former minority owner of the Warriors, bought the Kings for $534 million, just a slight premium over the $525 million Forbes valuation. The Maloof family paid $156 million to buy the team back in 1998. The Kings sale in 2013 set an NBA record, but would be edged out just slightly by the Bucks sale one year later.
Memphis Grizzlies, Oct. 2012
Ubiquiti Networks founder Robert Pera was just 34 when he bought the Grizz for $377 million with a group that included Justin Timberlake. Forbes valued the team at just $269 million then. The former owner, Michael Heisley, bought the team in 2000 for $160 million and moved it from Vancouver to Memphis.
San Diego Padres, Aug. 2012
Ron Fowler, along with the O’Malley family (heirs of former Dodgers owner Walter O’Malley) and the Seidler family, bought San Diego’s baseball team for $800 million, nearly double the Forbes valuation of $458 million. Fowler got the team from John Moores, who bought the majority of the team for $80 million in 1994.
Cleveland Browns, Aug. 2012
Jimmy Haslam, owner of the trucking company Pilot Flying J, bought the Browns—yes, the Browns—for $1.05 billion from Randy Lerner, whose family owned the team since 1998. Forbes valued it at $977 million and the Lerners had paid the NFL $530 million to get it.
LA Dodgers, May 2012
As previously mentioned, the figures for the Dodgers are especially staggering among this list: Guggenheim and Magic Johnson paid $2.15 billion for a baseball team Forbes valued at $1.4 billion, which is how owner Frank McCourt made off with nearly $2 billion in the process; McCourt, in 2004, had paid $430 million for the squad.
New Orleans Pelicans, April 2012
Tom Benson, owner of the New Orleans Saints, bought the team for $338 million when it was still called the Hornets (and moved it to New Orleans). Forbes at the time had valued the team at $285 million. Benson bought the team from the NBA itself, which purchased it from George Shinn in 2010 for $300 million. Shinn had paid $32 million for the team in 1987.
Jacksonville Jaguars, January 2012
The Jaguars sold to Pakistani-American billionaire Shahid Khan for $770 million. In its most recent valuation at the time, Forbes put the team’s worth at $725 million, the lowest in the entire NFL. So the lowest-valued team still sold for the second-highest NFL team sale price ever (at the time). Former owner Wayne Weaver had held the team since 1993.
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Daniel Roberts is the sports business writer at Yahoo Finance. Follow him on Twitter at @readDanwrite.
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