Street Speculator

It was reported last week that Charlotte Bobcats owner Robert Johnson was looking to sell the team. This move surprised the SPEC’s. Most Pro-Sports Owners never sell their team. Too much pride, adoration, buzz, even in the face of annual losses.

However, the Bobcats were never profitable during Johnson’s ownership. Forbes magazine values the team at $284 million. Robert Johnson purchased the team for $300 million + in 2003. The Bobcats are currently ranked 29th out of 30 NBA teams as far as valuation. The team reported a $4.9 million dollar loss for the most recent fiscal year.

It is believed that approximately 2 to 3 years ago, Johnson made capital call requests to his limited partners of which it is believed none of them would abide.  Johnson therefore had to pony up more of his own money to cover team losses. This move also increased Johnson’s ownership percentage in the team.

Nine (9) years of losses have finally become too much for the Billionaire. The new taxpayer funded arena could not remove any losses. If there is one thing about wealthy people we know is that they do not like to loose money. “The Rich Man’s Toy” as Johnson once called Pro-Sports teams, is now become an attractive nuisance (Legal Jargon).

Ironically, Robert Johnson will probably not have trouble finding a buyer. People are always willing to purchase Pro-Sports teams. The only obstacle he may encounter is in the asking price. He will probably attempt to be made whole from his initial investment, but in this environment, any price above $290 million is steep for an NBA team anyhow. Remember, Charlotte’s largest industry, banking, has its two largest institutions running off of TARP money. That is the perception anyhow.

Nothing seems to amaze me when Sports and Wall Street come together.

Daniel Snyder, owner of the Washington Redskins, just paid over $150 million for two (That’s right 2) players. Remember, his previous overpayment for free agents did not work out so well (Deion Sanders, Jeff George, Bruce Smith, and Mark Carrier).

Now Citigroup (Symbol: C), trading under $2/share, while being OWNED BY THE US government, loosing an average $10 billion/quarter, still wants to continue it sponsorship of the New York Mets stadium, Citi field. $40 million annually for 80 baseball games. Wow, no wonder Wall Street is in such good shape. 80 games of baseball should definitely add to their bottom line!!!!!!

Everyone knows that with some people in the U.S., SPORTS is like a 2nd religion. Some SPECs cannot conduct a normal conversation with some people unless SPORTS is the topic (SAD, Sad Commentary).

About 1 to 2 years ago, the U.S. Congress even held hearings regarding “The Use of Steroids in Major League Baseball.” This hearing was conducted while the economy was in the beginning stages of its subsequent demise, a seemingly unwinnable war in IRAQ was in place, and achievement gaps in educational system continued to increase. But for some reason, SPORTS seemed to be a top priority for U.S. lawmakers and took precedent.

Reggie Williams provides an illustration showing what his participation in SPORTS, as a player in the National Football League (NFL), has done to his body.

Before After

PRESENT DAY

Reggie Williams is a smart guy and not your stereotypical JOCK!! He is a Dartmouth graduate, former NFL Man of the Year, and former Vice-President of Disney Wide World of Sports.  Williams spent 14 years in the NFL as a linebacker for the Cincinnati Bengals. The wear & tear of the game has taken a toll on his knees (As evident in the pictures above).

Jerry Jones has been the owner of the Dallas Cowboys for over 14 years. His knees are fine (YOUR POINT?).

When it comes to SPORTS, think practically. It is better to OWN the team than play for one (Mentally, Physically, Emotionally, and Financially). Players are not decision makers, the owners are. Also, SPORTS Team ownership normally lasts more than 3+ years (The average career of a NFL player).

PARENTS: Stop living your fantasies through your children, especially with your sons. The SPECs will be thrilled to see the day when we can approach a parent, inquire about their children, and the response is something other than Athletic Achievements. Athletics can only carry you but so far.

Ask yourself: Would you rather see you sons grow up to be like these guys–

or like this one:

Last week was horrible. The stock market fell on every trading day, once falling over 500 points.

But, wait until the market opens after Columbus Day. The SPECs think the market will tumble more, with the DOW going under 7,000 points.

Our Rationale: The Credit Default Swaps payment on Lehman Brothers debt are due. It is estimated that the “issuers” of the Lehman Brothers Credit Default Swaps are on the hook for between $400 thru $600 billion. The problem is that the issuers of these CDS’s are not yet known. They can be anyone from AIG and Morgan Stanley to the various Hedge Funds and other asset management organizations..

We think that these issuers will have to sell assets (Including stocks) to settle the claims. Everyone knows that most of the companies issuing the CDS’s were undercapitalized, but got greedy in taking the million dollar premiums. There were no fundamentals attached. The Credit Default Swap saga will consume the media like the former ENRON once did.

All major economic indexes are dropping except the financials of Pro Sports Clubs. Is Professional Sports a truly “Recessionary-Proof” entity? Evidence seems to state in the affirmative.

There are new stadiums being built with none of the team owners complaining about the credit markets. Personal Seat Licenses (See NY Jets) and Luxury Suite sales seem to be on schedule and demand is on an upswing.

Maybe sports is the nerve calming outlet we all need created by the stresses generated by the stock market falls (A Daily Occurence). Sports seems to psychologically render above all else, especially when it comes to consumer spending.

Boston Red Sox CEO states that the team is doing fairly well (Look):