Buying a Baseball Franchise You Cannot Afford Is NOT A Good Idea

When Frank McCourt bought the L.A. Dodgers in 2004, many Californian eyebrows were raised (Botox permitting). The acquisition was hugely controversial because the deal was almost entirely comprised of debt. It's a move that was echoed by Tom Hicks and George Gillett a few years later when they bought the English soccer club Liverpool by borrowing against the franchise. Most sports fans struggle to believe that this is legal, let alone going on at all. This isn't, after all, a mortgage. Income is dependent on the franchise, as opposed to a house which obviously requires income from an outside source (i.e. a job). Plus, if debts don't get paid (as they often don't), then what? Foreclosure?

The saga of McCourt and the L.A. Dodgers is staggering, not least because a whole franchise and thousands of fans have been left in limbo by the owner's divorce. The Dodgers apparently have between $500 million and $1 billion is assets and between $100 million and $500 million in liabilities, and McCourt has filed for Chapter 11 bankruptcy.

But the real question is, what made McCourt (and Hicks and Gillett in Liverpool) more worthy owners than any supporter who goes to watch the team week after week. If virtually nothing in terms of personal wealth is required to buy a team, if almost the entire price can be borrowed against the franchise being bought, why can't Joe Shmoe buy a team? Seriously, who could do worse?

Naturally, McCourt is placing the blame on anyone's shoulders but his own. He is blaming the MLB Commissioner Bud Selig for refusing to grant a $3 billion dollar TV deal with Fox. Maybe he has a point. But surely the sagas of McCourt, Hicks and Gillett (among others) have proven that, if you don't have the money to buy and invest in a sports franchise, then you really can't afford a sports franchise at all.