Does Mark Cuban Think The NBA Is Done?
Mark Cuban sold the Dallas Mavericks for $3.5 billion. Why did he do that?
This is something that is very interesting considering Cuban is one of the most public supporters of the league. He states how well the league is doing and has a very bright future. His team does play in a strong market (Dallas) while having one of the league's brightest young stars.
So why is Cuban exiting stage left?
Actually, he is staying on to run operations. The difference is he has a bunch of money in his pocket.
Cuban understands technology. This is something few can dispute. For this reason, he probably has insight into the media uncertainty for the league's future. The television contracts with ESPN and TNT are coming up.
Taking Less Money
Some might say that $3.5 billion is a lot of money. Obviously it is. However, this might be a situation where Cuban undersold.
At the end of 2022, the Phoenix Suns were sold for $4 billion. Here we see the Mavericks were valued for less even though they play in a bigger market. Also, it was a year later, with the inflation of sports franchises in effect.
So did Cuban take less money? That is impossible to say. If the value of his franchise is less than the Suns a year later, it shows how far things are falling.
Or perhaps Cuban knows something.
Television Ratings
The ratings for the league are not strong. This is a problem considering it is about to enter into negotiations for a new contract. The advantage is that Apple and Amazon might be heavy bidders.
This year, they implemented an in-season tournament. Why would the league suddenly do something like this? It could be to try and massage ratings. Unfortunately, even with this, it was only a 4% increase over the regular season numbers from a year ago.
None of this bodes well for the upcoming contract.
With professional sports, the leagues are dependent upon the television money. Everything keeps escalating yet the starting point is the media. As long as multi-billion dollar money is tossed around, the leagues are fine.
Ratings through a wrench into the situation. This is a turn off to advertisers if they are falling. That means the networks have difficulty making their money back. If this is known, the bidding could fall off.
Is this what Cuban is projecting? Does he see the writing on the wall? He is still a relatively young guy so he is not estate planning, i.e. divesting himself of his assets. There is a huge difference between being in the early 60s as compared to entering one's 80s.
Prestige
Some might say that he is still running the team, hence nothing really change.
Nonsense.
The ownership of a sports franchise is all about status and ego. Sure, there is enormous equity gains to be made. Heck, there is probably tremendous cash flow for some of them. That said, these people tend to not have an issue with either of that. An extra $1 billion in equity value is not going to affect Cuban whatsoever.
Do you know what does? Being the owner of the Dallas Mavericks. That is a status that not many have. Whatever the sport, it is a very small club. Many have the money to own a professional sports team yet few do. That is how small the circle is.
Cuban was in it and now he left. He did so for a price that appears to be below market value. Why did he do this?
My guess is he knows the league is struggling. It has better demographics in its fan base as compared to baseball yet is seeing the ratings suffer. At the same time, the local broadcast network for much of the league is in bankruptcy. Cuban might be reading the tea leaves and bailing while he can.
We will see how this turns out. Cuban is not a stupid man and, I believe, has the ego to want to be a NBA owner. That title is no longer available to him.
Why did he give it up?
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It certainly sounds to me like he’s taking his money and running. I would do the same thing in his shoes! It doesn’t seem like a smart investment for the future, sports are definitely falling off. Hopefully he doesn’t turn around and buy some lame E-sports team lol
possibly looking to offset income. I always wonder why people purchase sporting clubs. Is it out of love or to lift their public profile.
Some people (or companies) buy professional sports teams for purely financial reasons, especially as it relates to taxes. That's not necessarily wrong, but fans shouldn't expect free agent binges under these sorts of ownerships.
On the other hand Mark Cuban was a superfan. He just happened to have enough money to buy a pro team in one of the planet's top leagues.
Ego is absolutely part of becoming a team owner, especially if one of a league's storied franchises is being sold (New York Yankees, Yomiuri Giants, Montreal Canadiens, Chicago Bears, FC Barcelona, etc.). For a superfan who happens to be owner, ego can override better financial judgment.
Unlike superfans such as Daniel Snyder of the Washington Commanders (formerly the Redskins), Mark Cuban was a successful owner by any measure. He took a sad-sack franchise to the post-season and then to a championship. He made his town THE place to be for free agent players. Television networks wanted to televise games featuring his team. While Snyder turned his team into a punchline for a bad joke, Cuban turned the Dallas Mavericks into a marquee team.
As financially rewarding as it can be to own (and later sell) a pro team, it's even more rewarding from a psychic standpoint. Mark Cuban took his team as far as he could take it, and he sees that the uncertainty of the next few years will drain the team of psychic value he perceives the team has.
The only thing he hadn't done was coach the team, and he may have turned out to be a better coach than some of those he hired to coach his team.
For an example of the opposite type of owner from Mark Cuban, look no further than the New York Knicks. Horror stories abound, so I won't bore you with those sad tales of woe. @taskmaster4450le and @jimmy.adames can explain this aspect of the Knick much better than I can.
Ego is probably the worst part of these team owners who believe they can run a sports franchise like they run the businesses they built their wealth on. The smarter owners like the Rooney's in Pittsburgh as a great example put the right people in place to bring them to the promise land of championships or at the very least consistent winning seasons. Dolan is a horrible owner and why the Knicks organization until now have not had many consecutive winning seasons @magnacarta
What you say in your comment is true, and it's good that you mentioned the Rooney family in Pittsburgh.
Ego alone isn't the worst part of those team owners. It's ego combined with lack of vision or intelligence. We deal with it as Knicks fans every day: we could tolerate an Emperor Palpatine because he had vision; instead, we ended up with Admiral Ozzel, and you know what happened to him.
Even though you're anti-NYY (not that there's anything wrong with that), you can see that Steinbrenner could have ended up like the Dolans had he not put the right people in place to run his team. Now he's remembered more as a Seinfeld character than as the lunatic owner of the Bronx Zoo-era teams and a twice-sanctioned owner.
It goes back to winning. Put the right people in place, get on track to winning or even a championship, and not only does it solve many problems but it also reflects well on ownership. It still surprises me that many owners fail to grasp this basic point. Although he was a train wreck the last 20 years of his life, Al Davis of the Raiders knew this to his bones and it showed between 1960 and 1990.
Yes that's a good point. The tax write off's would be huge for a sporting club. Given its a billion dollar sector. But that is another phenomenon like churches and taxes
Compared to his peers in the ownership class, Mark Cuban is a visionary. Being knowledgeable about basketball, the sport, and the league helps a lot, too.
While most ownership regimes run their teams like they run their top-line businesses-- and in some cases, it shows-- Cuban was quicker to adjust so that his team could benefit. He also spent more today for a larger gain tomorrow while many of his peers were pinching pennies.
Many fan bases would be lucky to have an owner like Mark Cuban. This is especially true for the New York Knicks fan base, but you already knew that.
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He might have his personal reason for doing that which he might not want to share to the public.
I think the team is going to be moved to Vegas
Certainly some team will switch to Vegas, but I highly doubt I'll be the Mavs leaving Dallas.
If you ask me too much money goes into these sports already. Maybe it'll take the viewership crash to bring franchises to reality. Then again, Countries like Saudi Arabia could simply step in and pump unlimited dollars so it isn't ending anytime soon
He probably knows something that isn't evident to most people yet. But I think the writing is on the wall that businesses built around traditional sports are on a decline. Better he sold now and set his sight on something else.
I dunno, I consume as much basketball as before. The G-league is becoming more famous and even Ice Cube 3 on 3 league has become more popular. That said, moving on its something people do. Michael Jordan also sold his stake on the hornets making shy of 3 billion as well, made 2.25B.
Doesn't mean the hornets are done or the league is done.
I would agree that he probably saw the writing on the wall and maximized his exit potential while still having the prestige of running the team. It must be more than just the TV ratings. I'll guess that attendance, and specifically corporate box sales are down too. The NBA demographic spends more on jerseys and sneakers than tickets and media packages.