Berkshire Hathaway 2008 Annual Meeting Audience Question # 47

The economics of owning a sports team

Warren Buffett:

Let’s go to number 9.

Audience Member:

I’m Andrew (the sound in this part of the video is inaudible) from Chicago, Illinois, and I’m nine years old, and I’m a big baseball fan. I know you like baseball, and my favorite team is the Chicago Cubs.

Would you like to buy the Chicago Cubs from Sam Zell?

And my question is, do you think buying baseball teams is a good investment?

Warren Buffett:

Well, it’s been a good investment. It’s been a good investment. It’s not been a good investment necessarily because the earnings have gone up so much, although cable television multiplied the value in a big way.

In effect, television expanded the stadium. Wrigley Field, I think, probably seats less than 40,000, maybe.

So you had 40,000 seats available when I went there for my first major league baseball game in 1939. But then along came television, and then cable television, and pay… in effect, pay-cable television for baseball or sports networks, and that multiplied the seats in a huge way.

Now, a lot of that went to the players, but some of it stuck to the owners.

I am not a… when I was your age, I would have thought if I made a lot of money, I would have bought a team.

But there were a lot of things I thought I would do then… I haven’t done subsequently.

So, I don’t think… if the Cubs sell for 700 million, and you’ve got a percentage of that in your bank account… now, I don’t think I would buy in at that price.

There’s a psychic income to many people in owning sports teams. I mean, it makes them famous. Maybe not in the way they anticipated when they bought the team, but the… you know, it is a way to instant celebrity and recognition and all that.

And as long as we live in a society where people have loads and loads of money, a certain percentage of people are going to want to become known for the fact that they have done very well in life, and a sports team is certainly one way of doing it. That isn’t the only reason people buy them, obviously.

But I will say this, you are not the first one that’s asked me about buying the Cubs.

I’ve had calls… not from Sam… but from other people, and it’s… I think I’ll leave that to you.

Charlie? You know anything about buying a sports team? He would be a tougher sell than I would. I might do something kind of stupid like that, but…

Charlie Munger:

Well, you’ve already done it once.

Warren Buffett:

Yeah. Touche.

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