I've started a topic here rather than clog up the Phoenix ownership thread as this discussion is more about whether or not it is possible to make money from owning a sports team rather than can the Nix make money? This topic obviously impacts on the discussion/arguments that have been going on in the other thread but I'm hoping we can have an intelligent conversation here and not the usual attack on others for holding a differing point of view.
I have always leaned towards the view that it is possible to make money from owning a sports team as long as the financial model is right and the structure of the league you play in, is structured in such a way that it allows you to be profitable. I based that view on a reasonable amount of experience with American sports ownership in various countries around the world and just a general understanding of how large corporations and businesses operate financially - having been employed by one of Australasia's biggest at executive management team level.
Armed with that view and the many opposite views thrown against me, I decided to do some internet searching. The subject is really fascinating.
The following quote sums it up for me: Generally, it is not the motivation of a sports team owner to make a profit, but to have their franchise increase in value. That's not to say that all teams don't make money, but many do not. It does seem that profitability of sports franchises for their owners is more dependent on the change in value of the team from its purchase to when it is sold than how much money it actually makes through ticket sales and television deals. However some teams are able to both make a profit and increase in net worth. A notable example of this can be found in the Los Angeles Angels of Anaheim, whom have produced solid profits and steadily increasing value in past years,
Much of the conversation in the other thread has been based on the narrow view that profitability is simply based on money in and money out. It fails to take into account appreciation of the asset over time [buy at a lower price than what you ultimately sell it for or what it is valued at - like buying a house in terms that most of us are more attuned to], ability to write off as tax, ability to use the asset in other ways such as marketing, forming business alliances and networks, cash flow etc.
It would be fair to say that the Nix are not making money in the normal sense and they are severely hamstrung by the fact that the club has no real value because of a number of factors. Because the club has no value, there is no prospect of selling the club and realising a profit above the price they paid for it.Therefore they are in a real catch 22 situation - simply shut up shop and get what they can for it or invest in a strategy that gives their club value and either allows them to sell it at a profit or have the club valued as a valuable asset [book value] that can be used in a variety of ways if they wish.
What prospects are there for a sale today? I'd suggest close to zero. The license can be cancelled in 2 years by the FFA and that looks to be probable if the FFA retain control of the A League. Metrics were set and agreed to and we simply aren't meeting them. The license is not transferable [in terms of location] under the current rules, so talk of these wanna be A League consortia wanting to buy the club and simply transfer it to their operations in Australia is not feasible under the current FFA/A League model. Any prospective buyer would need to be someone who is prepared to take a punt on getting the club at a low price, and then experience a significant change in the landscape that enabled the club to operate in a manner where it can survive and gain real value.
The second scenario is what I believe is happening now. Welnix are part of the group pushing for a change in the A League model and taking control away from the FFA. There is no doubt that clubs can not make money [in fact are more or less guaranteed to make an operating loss] in the current environment. That has to change to give all A League clubs [more so us] real value. Some form of restructure has been promised by FFA for years and this has lured new owners and caused current others to hold on to their clubs and wait for the day these changes were made. Its not just the Nix that needs this change.
Back to the general question of whether or not clubs can make money in sports - to make your mind up you really need to stop looking at leagues like the EPL where wages are out of control, the likes of the top leagues in Spain and Italy where things are really skewed in favour of the top 2 or 3 clubs [and wages are out of control] and look at other leagues and sports where clubs and leagues were set up in a way that allowed clubs to make money and then maintained the strength to maintain those structures and not give way to pressure by those with money to tamper with the salary cap or change the equal distribution of merchandising income model as examples.
Are there any clubs like this? I'm about to go away and search further, but the quote above cites the Los Angeles Angels baseball franchise makes money, and while they are in a huge market, surely its a matter of scale? smaller teams in smaller markets have lower costs but can operate in a similar manner but those quadruple 0's are more likely to be point 0's - but you get my drift.