Why would someone who did well enough in high tech to run off to a desert island for the rest of his life want to buy a pro sports team?
Because I could. I had been a Mavs season-ticket holder through thin and thin and was at the opening game of the ‘99-2000 season. It wasn’t a sellout. There wasn’t great energy in the crowd. And I thought I could do better. I’ve loved basketball my entire life. It was a dream opportunity, if I could get Ross Perot Jr. to sell. Of course, that was before I knew what kind of headaches and politics there would be. I wasn’t naive about the sport, but I certainly was about the NBA as a business.
For all the information about the Mavs available to me in the financial statements, there was no information from the NBA. It was a club that you were supposed to be fortunate to join. They set the rules, which included the level of disclosure they determined was adequate, and you either went with it or you didn’t. I wanted in to the club bad enough that I went with it. It was a period that was a bull market for rights fees, TV ratings, and franchise valuations. Everyone is a genius in a bull market. But the business of pro sports has changed in the almost four years I’ve been in the league.
What happened in those four years?
The entertainment world became more competitive. Movies started opening in three thousand theaters and became events. New sports were invented. TV ratings for all sports declined, went up, declined some. Most important, TV networks stopped increasing what they would pay every year and, in many cases, reduced rights fees and demanded more in return