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Original Issue

Promise her anything—but give her a couple of shares of the Milwaukee Bucks

The Jack Kent Cookes and Lamar Hunts own the lion's share of most sports operations, but a dozen or so franchises have cut the public in for a piece of the action and more are expected to follow suit.

Fans with a yen to sit in on annual meetings as well as home games can buy stock in the New England Patriots, Toronto Maple Leafs, Montreal Canadiens, Vancouver Canucks, Atlanta Braves, Baltimore Orioles, Chicago Cubs, San Francisco Giants, Cleveland Cavaliers, Milwaukee Bucks and Seattle SuperSonics. The Harlem Globetrotters also are publicly owned, while some other teams—among them the New York Knicks, Rangers and Yankees—are subsidiaries of publicly held corporations.

In some cases, the stock is hard to get. Although the Green Bay Packers went public in 1949 when a group of Wisconsin residents raised $125,000 to bail the team out of a financial crisis, today the club's 4,738½ shares are held by 1,698 individuals who rarely trade. Only three shares changed hands in 1971, each to a director of the club, and none at all were traded this year.

Wall Street is convinced that the leisure industry will be one of the big growth areas of the '70s, but there are other things for potential investors to consider. Major league sports are undergoing serious scrutiny by Congress and the courts, which means uncertainty and risk. Costs are mounting. So are salaries. And victory and defeat are important stock-market considerations. "When we win six in a row," says Atlanta Braves President Bill Bartholomay, "our stock can run to 40. When we lose six in a row it can drop to 20."

But even box-office success doesn't automatically mean a market winner. As a pennant contender, the Chicago Cubs boosted earnings to a hefty $473,934 in '71, but their stock, now selling at around 600, is far below its high of 1,000. A division championship helped the San Francisco Giants lift their '71 earnings to $29.11 a share, after a $69.94 per-share loss in '70, but the common stock of the parent National Exhibition Company now meanders around at about 500 vs. a peak of 1,100 in 1962. Oriole stock, up to 34 in 1966, now sells for 14 or so, and was not much higher during 1971, a banner—or pennant—year. All of which is easy enough to understand: what with attendance problems and militant ballplayers, investors just aren't turned on by the outlook for baseball.

Football is easier to get bullish about, but with Pete Rozelle opposed to public ownership stock-market candidates are hard to find. In fact, the only available stock is in the Patriots, who sold 120,000 shares to the public in 1961 when the team was part of the AFL and enmeshed in financial difficulties. "We could have played our games in a phone booth in those days," says a Pats director. A new stadium, TV money and higher attendance have changed all that, and Pats stock reflects it. Originally sold at 5, it now goes for 14.

In hockey, the securities action is dominated by three Canadian operations and one U.S. newcomer. Canadian Arena Company, which owns the Canadiens and minor league Nova Scotia Voyageurs, has 1,025,000 shares outstanding, 42% of them publicly owned; the stock, traded on the Montreal Exchange, ranged from a low of 11½ to a high of 17½. Maple Leaf Gardens, owner of the Maple Leafs, has risen from a low of 7 in 1962 to fluctuate between 28 and 34; along the way it hit a high of 37. Northwest Sports Enterprises, which owns the Vancouver Canucks and Seattle Totems, earned a tidy $610,720 in '71, nearly three times its '70 return, and sells at around 6½. Rounding out the roster is Sports Associates, a U.S. firm which sold 130,130 shares to the public at 3½ last January and which has a franchise—the New Haven Night-hawks—on the AHL ice this season.

One major league basketball franchise is buried in a publicly held corporate structure, the Knicks (Madison Square Garden Corp.). Three other clubs are on their own. Cleveland's Cavaliers, which hit the market with 400,000 shares at 5 in 1970, now sells at around 4½ despite an improved record and $325,000 in up-front TV money. First Northwest Industries of America, owner of the Seattle SuperSonics, sells for about 5, down from an alltime high of 11. The stock's decline probably reflects what the team calls an "extraordinary nonrecurring charge," otherwise known as Spencer Haywood. (Two other "nonrecurring charges," the ABA's Jim McDaniels and John Brisker, have also joined the club.) The Milwaukee Bucks, which went public at 5 in 1968, are now fetching about 8½, mainly because of the presence of Kareem Abdul-Jabbar.

Over the years, several other clubs have toyed with the idea of going public. The Baltimore Bullets filed a 25-page prospectus with the SEC in 1969, then withdrew the proposed offering when the stock market fell out of bed. Last fall Texas Sports Investments, parent of the Houston Rockets, announced plans to sell 300,000 shares of common stock, but its offering has been postponed, pending a resolution of the team's on-court and box-office difficulties. And today, the Minnesota Fighting Saints of the new WHA are taking steps toward a public offering—there is already a waiting list of buyers.

All in all, the best investment rule for sport is probably, as usual, Wall Street's oldest: caveat emptor.