The Green Bay Packers are known as the only publicly owned professional team in the United States. However, the Packers are not the only sports franchise that has considered going public. Dariusz Mioduski, owner of Legia Warsaw in the European Champions League, also considered setting up an IPO. What are some of the opportunities and threats for teams that might decide to go the IPO route in the future?
Pros of an IPO
The first major pro that would be associated with going public as a professional sports franchise is the ability to quickly raise funds. The club could then use the money for a variety of reasons. More cash could allow a middling club to offer a prime compensation package to lure prospective stars. Another option would be to use the funds for stadium upgrades. These improvements cost money, and fans of a team might be willing to fund upgrades. Another benefit that funding from an IPO might offer a club is the ability to pay off debt. Many franchises have sizable levels of debt, and a quick infusion of cash could allow them to pay off some of the debt that they have acquired.
Setbacks That Might Accompany An IPO
The first setback that might come along with an IPO is an inability to convince the public to bite on the sale. There are occasionally initial public offerings that fail to pay off as expected because investors are slow to join the party. Another reason an IPO might fail is related to control. Most sports franchises have solo owners or a small ownership team. Going public might mean that a team would have perhaps thousands or millions of owners. With a lack of clear direction caused by a large number of independent opinions, it can be difficult to find an effective leader and course of action.
Another possible problem that would accompany an IPO would be shareholder activism. Shareholders might decide to go in a different direction than those who actually know how the sports team operates. Some shareholders might want to fire a socially irresponsible player or make illogical financial decisions. These are a few of the possible pitfalls that might arise from a company choosing to go the public route.
The Green Bay Packers have been one of the more successful franchises in the history of the NFL, but their shareholders have no power. They can’t even sell their shares. How a club listed on an actual stock exchange might operate would be an interesting experiment, as there are many opportunities and challenges that could present themselves.