Woods Talks Sports Ownership
at Lyceum Speaker Series

By Jennifer Lloyd

If you’ve ever dreamed of owning your own professional sports team, then Gary Woods, president of McCombs Enterprises, has a few words of advice.
 
“It’s the most visible business you could possibly have, you have so many constituencies to please,” said Woods, who spoke before a large audience of McCombs accounting students on Sept. 12 as part of the Fall 2007 Lyceum Speakers Series. “That makes the management difficult.”
 
However, despite the complexities involved in trying to please the fans, the media, the players, the coaches and other interested parties, Woods said there actually is money to be made through buying, operating and selling sports teams.
 
And Woods should know. In 1979, Woods became president of the management entity for the Red McCombs family investments called McCombs Enterprises. Since that time, he has overseen periods of ownership of the San Antonio Spurs and Denver Nuggets basketball teams as well as the Minnesota Vikings football team.
 
“People always ask, ‘Well, why did you buy the Minnesota Vikings?’” Woods said. “It’s pretty simple. It was the only team for sale at the time.”
 
Woods described the process of buying the Vikings in 1998. He said completing the due diligence process for purchasing a professional sports team is easier than buying a grocery store or an auto dealership.
 
He said it begins with a review of the various revenue contracts such as those with sponsors, advertisers, concessions and the media. The next step is calculating the team’s expenses such as contracts for players, coaches and staff, as well as the stadium leasing agreement if applicable.
 
At the end of the process for those hoping to buy a National Football League team is an arduous approval process by the league that includes extensive background checks of all owners and partners.
 
“The league is a partnership and everything is shared equally among the 32 teams,” he said.
 
Team owners must split certain revenues with other league teams. National revenues from televised games and advertising along with many merchandizing profits are shared equally among the teams. However, teams do not share local revenues from suites, concessions, parking and local ads.
 
As for ticket revenues, Woods said 60 percent of that money stays with the home team while 40 percent is shared with the visiting team. But Woods emphasized that “ticket sales will not do the job.” Stadium revenue is the driver for significant incomes.
 
Woods said the Vikings brought in about $140 million in revenue per year. Though a significant sounding number, those revenues placed the Vikings in the lower quarter of the league. Woods said high revenue teams, such as the New England Patriots and the Houston Texans, brought in almost $100 million more a year than the Vikings.
 
Woods attributed the Vikings lower revenue figures to the poor stadium in which the team played. After unsuccessfully fighting for the construction of a new stadium, McCombs Enterprises decided to sell the Vikings in 2005 for $625 million.
 
“We’ve always run (professional sports teams) as a business,” Woods said. “We separate our emotions as a fan from our emotions as a business person.”
 
“You never really enjoy the game as a fan because you’re always concerned about an injury, you’re concerned about whether the beer is cold enough, the popcorn is hot enough,” he said.
 
Jason Murff, a fifth-year MPA student who attended the Lyceum lecture, said it was fascinating to hear about professional sports from the business side rather than simply watching as a fan.
 
“I love sports,” Murff said. “It’s really interesting to hear about the business side of it because most people don’t think about that. All you hear about is the players and the coaches … so you never think about financial incentives and what the owners have to take care of.”
 
Murff said if he had the opportunity, he would purchase the Texans or the Astros from his hometown of Houston.
 
“I doubt that is going to happen anytime soon,” he said. “But, I guess in a dream world, that would always be fun.”