Maybe Microsoft (NASDAQ:MSFT) should skip the software and start marketing sports ware. Because at the rate some of its founders are going, you have to think antitrust folks in Washington are watching!
I joke – but not too much – to make a point. With former Microsoft CEO Steve Ballmer’s $2 billion bid for the Los Angeles Clippers, he has single-handedly changed the valuation of all sports franchises, not just basketball. And he’s got some company, actually from his old company.
Microsoft co-founder Paul Allen already owns the Super Bowl champion Seattle Seahawks NFL team, and the Portland Trailblazers NBA team. And before you knock Ballmer for paying too much for the Clippers, remember that’s what they said of Allen, who paid $194 million and ponied up an additional $130 million toward a new stadium for the Seahawks back in 1997. Today that franchise is worth at least $1 billion (some suspect, after Ballmer’s Clippers purchase, maybe even more).
Football, basketball – it doesn’t make much difference. Between eager fans in the seats, and broadcast rights that carry any team’s brand around the world, there’s money to be made playing this game. Lots of money.
Consider Allen’s Trailblazers are now worth eight times what he paid for the team back in 1988. Not bad for a purchase that critics at the time called a silly billionaire’s vanity play.
To be fair, those media critics had reason to be skeptical. Let’s just say the record on billionaires and their big-league bobbles hasn’t been exactly encouraging. Consider Wayne Huizenga’s purchase of the Florida Marlins back in 1993. Four years later the team wins the World Series, only to be completely gutted the very next year, in what Time magazine later described as “one of the largest fire sales in sports history.”
Huizenga made a lot of money. But let’s just say in Florida, he didn’t make a lot of friends, or fans.
Most billionaire owners aren’t quite so abrupt. But neither are they all in it for the vanity. If you think about it, they didn’t get to be billionaires by flushing their money away, so most today see a team as building an asset, not just showcasing one.
And that’s why what Ballmer’s eager to do with the Clippers bears watching. He’s paying top dollar, but keep in mind that others, including a group led by Oprah Winfrey and entertainment mogul David Geffen, were willing to pay pretty darn close to that top dollar. Also keep in mind Ballmer’s prior run at the Sacramento Kings last year. He failed -- but his interest was clear.
Like Allen, he has cash. Lots of it. At a tad north of $40, Ballmer’s 333.2 million Microsoft shares are worth more than $13.4 billion. Allen’s Microsoft stockpile is a couple of billion bucks more than that, so clearly both men have enough money not to rush a quick payoff or pull a Huizenga flip-off.
Ballmer can also learn from his former colleague that there’s a reward for those sports team titans who wait. After all, Allen just won a Super Bowl.
It didn’t happen overnight. But it did happen.
The Clippers…NBA champions? Don’t laugh. Steve Ballmer’s got two billion smackers riding on it, eventually.