Why would a business purposely want to keep its revenue and value down? Why would a professional sports team purposely lose, trade away much of its talent and purposely not pick up assets that would immediately boost team value by creating media attention and increased ticket sales? The answer—there is a slight of hand that happens in professional sports. Billionaire team owners are no dummies, but they treat fans as if they were.
Most fans cannot see past the trickery and double-talk, preferring to believe some owners just aren’t very smart and don’t know how to run a team. Or fans may believe that getting a top draft pick is enough incentive to tank a season. Year after year, the Jacksonville Jaguars and its owner, Shahid Khan, seem to have no interest in building a winning team and have been content with being average. Most recently, it has gotten to the point in which they don’t even seem interested in being competitive. The Jaguars and the NFL doggedly continue to roll out a bad product in front of its Jacksonville fans, and then label them as not loyal, unenthusiastic and unworthy of its own team by evidence of the low attendance at games.
If we follow the money, and look at recent history, there is purpose and precedence in underperforming. The owners of the Seattle Supersonics were no dummies, in fact quite the contrary. According to a report by Forbes, when a group of new owners purchased the Sonics in 2006, and rumors were flying they wanted to move the team, ownership persistently denied it. Yet ownership was slow to make any significant team investments or positive moves, and the Sonics continued to underperform. After a new $500 million arena deal was voted down by skeptical taxpayers not convinced of ownership loyalty, and emails were leaked by management complaining of being “doomed to have another lame duck season in Seattle,” ownership and the NBA continued to deny the rumors of a move.
Yet in 2008, after Oklahoma City approved $120 million in tax incentives to lure the team, Supersonic ownership’s intentions all along became clear. Stadium deals are big business and teams moving to a fresh, enthusiastic market ready to buy tickets and merchandise are great for revenue and increasing team value. And indeed, since that time the team value has surged, proving ownership were no dummies. For small market teams, these business tactics are easy, more proven and much quicker than building team value through long-term commitment to winning and excellence, and providing a competitive product in order to build and sustain loyalty with a community.
In Dec. 2011, it was reported by the Florida Times-Union, that if the Jacksonville Jaguars’ owner wanted to move the team to a new city before 2030, he’d have to pay the city millions of dollars to get out of its lease for EverBank Field. Howerver, the team could avoid paying a lot of those penalties — which could total more than $100 million — if it lost money one year and was below the NFL’s revenue average the following two years. Almost, two years later, after continued mediocrity and questionable player moves or lack of (like trading Eugene Monroe and not signing Tim Tebow), with cities such as Los Angeles, London and others on the radar for the NFL as preferred destinations for a new team and stadium deal, it could appear Khan and the Jaguars may have a motive to lose money (for the short term only), and wish to mirror the quick fix model of success for increasing team revenue and value, by following in the footsteps of the Oklahoma City Thunder owners and the NBA.