Renee Montgomery’s basketball resume includes a couple of WNBA championships, an All-Star Game appearance and a Sixth Woman of the Year award.
It now also includes co-ownership of the league’s Atlanta Dream. She bought into the team as a limited partner earlier this year in a deal that made headlines because the new ownership group replaced Kelly Loeffler, the former Republican U.S. senator who was vocal in her opposition to the WNBA’s anti-racism efforts.
Montgomery, 34, now helps run the Dream as vice president. She is part of a wave of current and former athletes, along with a batch of celebrities, buying ownership shares of sports teams.
Why is this a trend?
Motivations vary and often are myriad.
Montgomery explained her investment motivation — aside from her obvious love of basketball and some public urging by LeBron James — in a statement provided to The Athletic: “Being a co-owner of the Atlanta Dream meant a lot to me because of what it meant for my family and the sports community. My hope is that having former athletes and women in positions of power becomes normalized because both are extremely qualified.”
For some athletes, buying a small piece of a team can be a classroom or laboratory for future controlling or full ownership of a team — and a role-reversal education when it comes to labor versus capital. Others are simply fans of a particular sport or team and buying into them gives them access and allows them to be part of something they enjoy.
Some buy into major-league teams because professional sports teams can be fun financial assets compared to traditional portfolio staples like stocks, bonds and real estate. Team values in the majors have done nothing but grow for decades because of ever-increasing broadcast rights deals, and limited partners can cash out for a profit one day.
Even smaller and minor leagues are attractive because some have seen growth and are poised to cash in on the rising demand from TV networks to populate their channels and streaming services with live sports content.
“No one ever cheered T-bills gaining interest,” said Marc Ganis, president of Chicago-based consulting firm Sportscorp Ltd. and a consultant to NFL owners.
Athletes are increasingly able to pursue team ownership because of their wealth, he added.
“The players and celebrities have more money. They’re making so much money in their athletic endeavors, and this is another asset place to put their new wealth,” Ganis said.
Still, except in rare cases, full control of teams remains with the captains of high finance along with tech, real estate and energy tycoons. Athletes are knocking at the door, however.
The rising salaries and endorsement income for the top modern athletes have positioned them to buy into teams and sports that traditionally were out of reach, and team ownership in the major leagues is a way to build generational wealth for groups, particularly African Americans, who were prevented from assembling that kind of money for much of the nation’s history.
“The Black athlete historically has always looked into investing. Team ownership has been one of those things they were kept out of,” said Louis Moore, associate professor of history at Grand Valley State University in Michigan. His focus is African American, civil rights and sports history. “Now they have access to the money because they helped changed the leagues. There is a new generation of athletes who are looking at money a lot differently and investing a lot differently than the past.”
Another investment motivation is to signal support for growing leagues, particularly in women’s sports that are making fresh progress in gaining audience. Team ownership has been almost entirely, but not completely, wealthy White men. So, there’s a desire among some investors to broaden representation to better reflect the diversity of the audience and the labor force — particularly in sports where most of the players are Black.
This month, veteran NFL running back Mark Ingram II, the former Heisman Trophy winner who recently signed with the Houston Texans, bought a share of Major League Soccer’s D.C. United for an undisclosed price. He told Forbes earlier in June that his MLS investment stems from being a soccer fan and believer in the game’s growth potential in the United States, but also because of his desire to learn the business side and to inspire more Black youth interest in the game.
“I think athletes in general, your days are numbered. Any time you can kind of learn and grow from an entrepreneurship standpoint and ownership standpoint, that’s huge. I think that’s something that a lot of guys are kind of interested in. And a lot of guys are trying to find if they can even be a part of it,” he said. “I want to grow; I want to learn the ins and outs of how to run a team. And I just want to grow, man. To use my passion and dedication that I used to become an athlete, to use that same passion and dedication to become an entrepreneur, to become an owner. Hopefully, this will be a stepping stone to a lot of future things.”
MLS has been a popular vehicle for athlete and entertainer investments because it’s a major league with significant growth potential while not being nearly as expensive to buy into as the other big leagues. The average MLS team is valued at $313 million by Forbes, which is almost $3 billion less than the average NFL team.
Another MLS buyer is the Brooklyn Nets’ Kevin Durant, who took a 5-percent share of Philadelphia Union in 2020, with an option for another 5 percent in the future. How much he paid wasn’t disclosed.
Durant wasn’t available to comment, but Rich Kleiman, his business partner in their Thirty Five Ventures investment firm, offered a statement: “KD and I have been really interested in team ownership for some time, and the MLS is a league with tremendous growth potential, so it was an area we spent a lot of time educating ourselves on. In the process, we became close with the ownership group at Philadelphia Union, and it became clear that we all had similar mindsets with respect to marketing, community relations and more. We definitely saw it as an opportunity to learn more about the ownership side but also a smart financial move that made sense for us as a business and one where we could make a real impact.”
Comedian Will Ferrell is one of a long list of celebrities and former athletes who have a piece of ownership of MLS club Los Angeles FC. (Kirby Lee / USA Today)
MLS’ Los Angeles FC includes co-owners Magic Johnson, Will Ferrell, Tony Robbins and the sports couple Mia Hamm Garciaparra and Nomar Garciaparra. The Seattle Sounders have co-owners in Ken Griffey Jr. and Russell Wilson while James Harden is an investor in the Houston Dynamo. Steve Nash has a share of the Vancouver Whitecaps.
MLS didn’t respond to a request for comment about the league’s celebrity ownership.
Another recent athlete team investor is tennis superstar Naomi Osaka, whose decision to pull out of this year’s French Open sparked a conversation about the importance of mental health. She bought a share of the National Women’s Soccer League’s defending champion North Carolina Courage and explained her motivations in a team statement.
“The women who have invested in me growing up made me who I am today, and I cannot think of where my life would be without them,” Osaka said. “My investment in the North Carolina Courage is far beyond just being a team owner, it’s an investment in amazing women who are role models and leaders in their fields and inspirations to all young female athletes. I also admire everything the Courage does for diversity and equality in the community, which I greatly look forward to supporting and driving forward.”
Kansas City Chiefs quarterback Patrick Mahomes said he spent almost a year negotiating to buy into Major League Baseball’s Royals in 2020. He joins a group of more than 20 investors (led by local businessman and former Cleveland Indians minority owner John Sherman) that bought the team for $1 billion in 2019.
Mahomes, son of a major leaguer and a former baseball player himself who was drafted by the Detroit Tigers in 2014, moved into a different financial tier after signing a $500 million contract extension and landing a series of lucrative endorsement deals. But he doesn’t know if he’ll use his wealth to one day own a team.
“I don’t know if I’ve ever thought about fully owning a team … but I’m obviously very interested in all sports and being a part of sports even when hopefully a long time from now my sports (playing) days are over,” Mahomes told ESPN in 2020. “I want to be a part of sports for the rest of my life because it’s given so much to me.”
Perhaps the most star-stuffed ownership group is NWSL expansion team Angel City FC, scheduled to begin play in 2022. Its owners include tennis icons Serena Williams and Billie Jean King; actors Natalie Portman, Jessica Chastain, Eva Longoria, Jennifer Garner and America Ferrera; WNBA star Candace Parker and NHL star P.K. Subban; talk show host James Corden; former soccer star Cobi Jones; and former NFL player Ryan Kalil. Oh, and 14 former members of the U.S. women’s national soccer team, including Mia Hamm Garciaparra.
The NWSL’s Washington Spirit has co-owners that reportedly include current and former athletes such as Dominique Dawes, Briana Scurry, and Alex Ovechkin along with Chelsea Clinton, Jenna Bush Hager and former U.S. senator Tom Daschle.
Other notable athletes with sports team ownership stakes in their investment portfolios include Derek Jeter (Miami Marlins), Alex Rodriguez (Minnesota Timberwolves/Lynx, starting in 2023), and Venus and Serena Williams (Miami Dolphins).
That’s just the start of a long list of athletes and entertainers with stakes in teams both domestic and overseas. Why do rich owners sell them shares?
Simple: They want or need the money without giving up control, or they want to reward family and friends with the perks of ownership. And if they need serious capital, they’re not selling shares to athletes and celebs, but to their billionaire peers.
Teams in newer leagues often seek junior partners to keep the cash flowing — someone else’s cash, ideally — while the sport tries to gain audience and reach profitability. And that’s a significant risk for any limited partner investor: Will they have to keep putting more money into the club?
“Once I write the check, how many more checks am I writing? If there are losses and I’m an owner, someone has to put money in to keep it going,” said Michael Rapkoch, president of Texas-based Sports Value Consulting that is heavily involved in buying and selling teams.
Major League Soccer, now in its 26th season, has yet to turn a profit but still attracts both wealthy investors and athletes and celebs seeking to buy into it.
That’s because soccer is the world’s most popular sport, and it continues to make promising gains in football-dominated America. It’s also because while MLS isn’t making money, its Soccer United Marketing arm — which sells media rights for various leagues and competitions — is reportedly very profitable.
Athletes and entertainers (and anyone, really) that buys a non-controlling share in a team typically do so at a discount — maybe 10 to 25 percent in the big leagues — because the ownership stake has limited influence on how the team functions. When the majority owner sells, the limited partners are able to sell their shares for their full value to the buyer.
Perks for limited partners can include a suite or prime tickets, access to players and events, and the ability to mingle and network among the celebrities and powerbrokers that attend games.
What minority owners get for their money depends on the agreement they sign when buying into the team. It’s critical to negotiate a deal that spells out all rights and privileges and gives the buyer access and a voice in decisions, Rapkoch said, and also makes clear if the limited partners are on the hook for capital calls.
“Get everything in writing,” he said. “If you’re a star athlete and expected to go on the field to promote the game, or meet with suite holders and sponsors, get that in writing. More times than not, as a limited partner, you’re not going to have a lot of say in operations. The operating agreement is the key thing a lot of them don’t understand what it means.”
Kansas City Chiefs quarterback Patrick Mahomes recently bought a stake in the Royals, joining majority owner John Sherman (right). (Denny Medley / USA Today)
It’s also important to know that limited stakes generally are not cash spigots. The money made by a team usually is invested in player and front-office salaries and operations or banked for the future. Majority owners in the major leagues certainly can and do take a salary, and often have family and friends on the payroll.
“You shouldn’t go into buying a club thinking you’re going to get a distribution,” Rapkoch said.
Selling is when the payday occurs. And sports teams are attractive investments because their value goes up and up and up, and while not recession-proof, they are resistant to normal economic cycles.
“When the economy goes down, the price of a team isn’t going to drastically drop,” Rapkoch said. “We have not seen an owner sell a team for less than he purchased it for.”
Still, the big payday will be for the controlling or majority owner who sells, but in the major leagues, all the partners are likely to enjoy a profit. Hence, the wave of buyers isn’t a shocker to those involved in team sales.
“I don’t think it’s terribly surprising,” said Steve Greenberg, the former MLB deputy commissioner who became one of the leading figures in sports team sales at Allen & Co. “Historically, they’ve been good investments.”
Beyond investment potential, limited partnerships can aid future bids for full control.
The leagues — the headquarters executives and its other team owners — get a chance to familiarize themselves with junior partners, which can give them a leg up when pursuing majority ownership and undergoing vetting. For example, a couple of Pittsburgh Steelers limited partners parlayed that experience into full ownership of other teams: Jimmy Haslem bought the Cleveland Browns and David Tepper purchased the Carolina Panthers.
While Tepper, who Forbes says is worth $14.5 billion, learned the NFL team ownership ropes while holding 10 percent of the Steelers, his pursuit of the Panthers was greased not just by his familiarity among other owners.
“What really benefitted him: Double-digit billions and easily identifiable funds,” said Ganis.
The NFL has the biggest financial barrier to entry. Aside from the enormous franchise values, it doesn’t allow companies or investment vehicles to buy into teams, and principal owners must pay cash for the 30 percent minimum stake to become principal owner with a plurality of shares.
“The NFL is different because you almost have to be a double-digit billionaire to be the controlling owner,” Ganis said. “It’s a much more expensive proposition, and the NFL doesn’t allow private equity money or less standard means of providing funds to buy a team. The other leagues are more amenable to that kind of thing.”
He predicts the next NFL team sale will top $4 billion — a cost that prices out most of the human race.
“Eventually the NFL will loosen the restrictions to a degree, but only to a degree. The current decision-making system has served the league well,” Ganis said. “The values are going up anyway without private equity money.”
Former players and entertainers often buy their shares as part of investment consortiums. For example, Magic Johnson is part of Guggenheim Baseball Management that pooled money to buy the Dodgers for $2.15 billion in cash in 2012. The chief investor is billionaire Mark Walter, who made his fortune running financial services giant Guggenheim Partners.
Other leagues are less expensive to buy into, but still not cheap. The NBA has reportedly been bundling limited partner stakes made available by current controlling owners and seeks to sell them to private equity and other investors. The purpose is to raise money for current owners, particularly as teams recover from losing a significant share of in-game fan revenue because of the pandemic.
The NBA’s biggest star of the 21st century has said he’s keen to one day own an NBA team as the controlling owner. To get there, LeBron James has built a business empire off the court and in March bought a share of Fenway Sports Group that owns the Boston Red Sox and other sports assets. The deal exchanged his 2 percent stake in the Premier League’s Liverpool club, which Fenway controls, into a share of Fenway itself. He made the new deal alongside his longtime business partner and friend Maverick Carter and explained his motivations for ownership.
“I think for me and for my partner, Maverick, to be the first two Black men to be a part of that ownership group in the history of that franchise, I think it’s pretty damn cool,” James said at the March 17 press conference. “It gives me and people that look like me hope and inspiration that they can be in a position like that as well, that it can be done. It gives my kids at my I Promise School more and more inspiration as well.”
James has been open about his desire to own an NBA team, and his career success and enormous on- and off-court earnings put him in a position to secure the capital and investor consortium to make that happen. The James-Carter bloc is influential enough that Fenway’s principals are likely to listen to them in ways that other limited partners don’t experience. Having a voice in the ownership room can be useful experience for eventual controlling ownership elsewhere.
“Working with Fenway Sports Group for the past decade has taught LeBron and me so much about the business on a global scale, and we’ve always believed it would lead to something bigger,” Carter said in a statement. “We are proud to be part of this iconic ownership group and are excited about the opportunities that come with that to continue creating change and empowering people of every race, gender and background to be part of the process.”
LeBron James’ expanding business empire includes stakes in Liverpool of the Premier League and the Boston Red Sox. (Dale Zanine / USA Today)
While there are other non-White majority owners in U.S. pro sports, the lone Black controlling owner of any of the 150 teams in the five major men’s leagues is Michael Jordan, who paid a reported $175 million in 2009 for control of the NBA’s Charlotte franchise. He bought the team from Black Entertainment Television co-founder Robert Johnson, who was the first Black majority controlling owner of a U.S. major league team.
Diversity in team ownership is important, particularly in leagues and sports where majority Black labor generates the profits, because a range of viewpoints and experience in the room where decisions are made is crucial to growth and success, experts say.
“The closer (diverse investors are) to the big room of owners, the better off the league can be in terms of doing positive, and frankly, not screwing up,” said Kenneth Shropshire, a noted African-American academic and author who today is CEO of the Global Sport Institute at Arizona State University.
Diverse ownership should help boost non-White executive and coaching ranks, too.
“Athletes invest in social justice but can also influence change in how sports are run if they have ownership stakes,” said Richard Lapchick, director of The Institute for Diversity & Ethics in Sport (TIDES) at the University of Central Florida. His organization grades leagues for diversity.
“If you’re an athlete of color, you have that additional reason, that you might be able to leverage those discussions in the board room,” Lapchick said.
Ownership was once the strict purvey of White men, but more women have entered the ranks, and more people of color are, too.
“There is an issue of color in acquiring sports team, but that color is green. It really is a matter of money,” Ganis said. “As we see African Americans creating great wealth, we will see more African Americans owning sports teams. … We’ll see more of that, and it will go from discussion to actually getting it done.”
Ganis attributes the wave of athletes buying ownership shares to not only increased player wealth but also trend-setting.
“When athletes start investing in a particular area, there’s a great deal of follow-the-leader,” Ganis said. “They hear about it in the locker room, and when they get together at all-star games and other events. American athletes, in particular, have a great interest in the extremely wealthy self-made people.”
(Top photo of Magic Johnson with Los Angeles FC supporters: Shaun Clark / Getty Images)