Lately, new investors have been popping up from coast to coast in professional sports teams deals. As PE and VC portfolios rebound, some of the boldface names in charge of them are loosening purse strings to make the mega-ego purchases of professional ballclubs. That means, possibly, PE pros Josh Harris and Steve Pagliuca could find themselves in a dispute not over how the carry is split in a club deal, but over who carried the ball the previous night in the Celts-76ers game.
Although these investors are savvy when it comes to LBOs, IPOs and dividend recaps, things haven’t always panned out the way they’ve wanted on the diamond/gridiron/hardwood/ice. Just because you’re a baller in the boardroom doesn’t mean you can be a GM. But the only way to learn that is the hard way. Here’s a look at the VCs and PE pros who jumped feet first into the rough-and-tumble world of professional sports — and what sorts of challenges await them.
[slide title=”Pagliuca, Breyer, Bonderman, Others — Boston Celtics”]
Marino’s Take: Boston Basketball Partners will likely make a fortune if it ever sells the Boston Celtics. The investor group paid $360 million for the storied team in 2002, and the Celts brought home the bacon six years later, winning the NBA crown. The founding investors of Boston Basketball Partners are a Who’s Who of from the worlds of private equity and venture capital. They include Steve Pagliuca, managing partner of Bain Capital Partners; Wyc Grousbeck, CEO of the Celtics and advisor to Highland Capital Partners; David Bonderman, founding partner of TPG Capital; Jim Breyer, general partner of Accel Partners; and Glenn Hutchins and David Roux, founders of Silver Lake Partners.
Prediction for Next Season:Without Shaq, they’ll fare well, but they will still miss Kendrick Perkins — and the NBA Finals.
[slide title=” Josh Harris of Apollo & David Blitzer of Blackstone”]
Josh Harris & David Blitzer
Day Jobs: Senior Managing Director, Apollo Global Management, and Senior Managing Director, Blackstone, respectively
Marino’s Take: They haven’t struck a deal to buy the 76ers just yet. Let’s hope veteran PE investor Josh Harris will be handling free agent contract negotiations with the Philadelphia 76ers if his club deal with the younger David Blitzer doesn’t pan out. One of Blitzer’s prior negotiations has made headlines, and not in a good way. Still, if the PE duo can successfully buy into the 76ers, they’ll be getting into a franchise in the heart of a rabid sports town that has cranked out some champs (Phils) as well as contenders (Flyers, Iggs). They’ll need to quickly sink capital into this investment to make it work, however. The Sixers are in need of upgrades.
Prediction for Next Season:They couldn’t beat the Heat in the playoffs in ’11, and 2012’s not looking good for that either.
[slide title=” David Einhorn — New York Mets”]
Day Job: President of Greenlight Capital
Team: Minority Owner, New York Mets
Marino’s Take: Einhorn has a habit of being dead right when he makes an investment (like his shorts on Allied Capital and Lehman Bros.). His deal to assume control of the Mets before the decade is out will position New York baseball’s little brother to have someone (finally) with a ton of capital to back the franchise. But let’s see how well Einhorn will be able to compete when every superstar in the majors would prefer to play on the other side of the Whitestone. If being the boss of the Metropolitans doesn’t pan out, Einhorn will always have his day job. Greenlight’s annualized return since 1996 is a jaw-dropping 21.5 percent.
Prediction for Next Season: Let’s just say you’ll be better off watching the Yanks.
[slide title=” Joe Lacob — Golden State Warriors”]
Day Job: Partner at Kleiner Perkins Caufield & Byers
Team: Co-owner, Golden State Warriors
Marino’s Take: Lacob’s got one thing going in his favor, going into his first full year running the day-to-day operations of the Golden State Warriors: In nearly 50 years in Oakland, Calif., the team has only one championship to show for it. He’s got another thing going in his favor–experience, compared to his peers. Lacob was on Team Pagliuca, once upon a time, when the Bain pro invested in the Boston Celtics (NBA regs prohibit having stakes in more than one franchise, of course). With a pick in the top half of this year’s draft, Lacob may reach for a big man to support his fantastic backcourt duo of Ellis and Curry. We’ll find out in just a couple of weeks.
Prediction for next Season: Lacob’s other firm, KPCB, will have a better year than the Warriors, what with investments in companies like Zynga. Still, look for Golden State to round out the West’s playoff lineup. PeHUB tried to push its fellow Terp, Jordan Williams, onto Lacob in this year’s draft, but we expect he’ll be going bigger.
[slide title=” Tom Gores — Detroit Pistons”]
Day Job: Chairman, CEO, Founder, Platinum Equity
Team: Gores owns the Detroit Pistons with his PE shop
Marino’s Take: Tom Gores really has his work cut out for him. He’s taking over the storied Detroit Pistons franchise, which rose to success last decade under the stewardship of general manager Joe Dumars, who helped a rough-and-tumble team win championships about a dozen years prior. Now — with some of Platinum’s coin — Gores’ deal to buy the Pistons and their Auburn Hills arena puts him in control of a team that needs new personnel and a new place to play.
Prediction for Next Season:The Pistons are a few parts away from the Rip Hamilton-led team that thrilled the city of Detroit seven years ago. Hiring a certain former employee of the NY Knicks will only push them further from that goal.