Are Sports Team Investments an Amusing Afterthought or an Untapped Goldmine?

May 20, 2024 (Investorideas.com Newswire) Increasingly, investors in the United States are looking at sports teams to diversify their portfolio. Owning a sports team - or even just shares in a sports team - used to be seen as nothing more than a bit of fun for the ultra-rich. Now though, it seems like 'serious' investors are viewing sports teams to make serious cash. We're going to dive in to the world of sports investments, with arguments on both sides. At the end of it, we'll hopefully have convinced you (one way or the other) to add a sports team to your portfolio or stick to standard stocks.

Profit Making Potential

The number one reason for making any kind of investment should always be to make a profit. While sports teams are certainly on the riskier end of the scale, they absolutely can and do turn profits. There are dozens of different revenue streams that can come from a single sports team. Not only can you make money from the obvious things: ticket sales and merchandise, but there's also money to be made from broadcasting rights and bumper brand sponsorships.

Not to mention if you become a sports team insider, you're privy to a whole load of insider information. Many big fans get involved with hockey teams to improve their knowledge on the sport and thus their NHL bets. We're not recommending betting to make money, but making informed bets only is likely to be more profitable than making bets on a whim!

Catastrophe Can Happen

We promised you a balanced view and that is what we will deliver. While substantial revenue is possible, there's no guarantee. If there was, it wouldn't be sport! Successful teams can generate a whole lot of money, but there's no telling if a team might become plagued by injury, or a new (and expensive) signing doesn't gel with the rest of the group. Sports at the major league level are all incredibly difficult to be successful at. Otherwise, everybody would be doing it.

Pair this with incredibly high operational costs and things can be a recipe for financial disaster - if performance starts to nosedive. The cost of keeping a stadium, paying salaries, shipping players around, and even marketing the next big game - none of these can be understated. While they won't fall on your shoulders if you're just a shareholder, they will eat into your profits.

Emotions: Good and Bad

The next point is neither for nor against, but rather a warning. Investing in sports teams can be an emotional business, for both good and bad. On the one hand, investing in a sports team gives you a stronger connection to them. Their wins feel like your wins. It's a little harder to get excited about the next multivitamin, or car tyre advancement, but a win from your sports team is exciting, always.

The downside is that a lose from your sports team can feel, well, crushing. If you're able to cope with this, then it might still be a worthwhile investment for you. However, you should also consider that a loss is emotional for the team too. Once a loss turns into a losing streak, it can be difficult to dig even the most professional of athletes out of that pit of worry, which in turn, can lead to a downturn in the value of your investment. Think carefully about how well you cope with strong emotions and how well your potential team does.

A Huge Financial Hurdle

Our last point is perhaps an obvious one. A sports team is a big investment. If you're getting in at the very low shareholder end, then you can take this with a pinch of salt. With that said, if you're diving in and buying a whole team, you're going to need some money (read: a lot of money) to even get started.

To begin with, investing in a sports team is a regulatory minefield. You'll need a portfolio manager with a lot of experience, and I'm sure I don't need to tell you, they don't come cheap. Once you've secured the deal, there's still a high first investment cost to really get involved. Again, shares can be bought, but a whole team needs mega bucks.

With all of this said, the rewards of owning shares in/a whole sports team, are many. If you're after prestige and status, but don't fancy a library or a museum, then a sports team might be the way to go. It's the ultimate symbol of success and an effective way to enhance your own personal brand. Plus, if things do go well, there's potential for huge appreciation. As all good investors know, considerable risk investments, can also be high reward.

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