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Globe and Mail
12-05-2025
- Business
- Globe and Mail
Owning Senators, or any sports team, beats public market investments
Last month, Ottawa Senators owner Michael Andlauer sold the logistics business where he made his fortune for $2.2-billion, after more than tripling the company's value in the past six years. Pro sports is likely to be an even more lucrative investment for Mr. Andlauer, a self-made billionaire and beer-league hockey goalie. Set aside what you've heard about frothy valuations on hockey, baseball, basketball and football teams. Owning a franchise such as the National Hockey League's Senators is a proven approach to making serious money, according to a study run by the University of Michigan's Ross School of Business and private equity firm Arctos Partners LP. For all the talk of sports investing being driven by the greater fool theory – with one deep-pocketed fanboy justifying buying a team on expectations of eventually selling to an even wealthier frustrated jock – there are solid economics behind the lofty prices that teams command. Over the past 20 years, owning a stake in a team from one of the four major North American leagues – the NFL, NBA, MLB and NHL – provided an impressive 12.3-per-cent annual return, according to the Ross-Arctos Sports Franchise Index. That's significantly better than the performance of any public market benchmark, such as equities, fixed income or commodities. Decades of double-digit returns, along with the leagues' recent liberalization of rules to allow institutional investors into ownership groups, explain why asset managers are now lining up to put money into sports. Pension plans and private equity funds put a priority on assets that turn in predictable results regardless of market conditions, or what the Street calls 'uncorrelated returns.' The institutional investor crowd also gets worked up about businesses with rising profit margins, which the NHL, NBA and NFL currently enjoy. Legacy media business, such as television networks, continue to pay up for the rights to games. At the same time, deep-pockets streaming platforms such as Inc., Apple Inc. and Netflix Inc. are starting to bid. So broadcast revenues in leagues with salary caps, giving teams the ability to control costs that come from paying players. The NHL, NBA and NFL all recently announced new broadcast deals that guarantee billions in revenues for more than a decade. University of Michigan academics Emory Kaplan and Jon Grossman said in a report that 'institutional investor interest is rising thanks to this long-term revenue and cost certainty.' All of this is music to the ears of Rogers Communications Inc., which will eventually bring in partners at Maple Leaf Sports & Entertainment, parent to Toronto's pro teams. And it's ancient history to institutional investors such as the Ontario Teachers' Pension Plan, which made serious money as MLSE's former owner. Team owners such as Mr. Andlauer, a 60-year-old who previously owned a stake in his hometown Montreal Canadiens, aren't just investing because they are fans. Over the past five years, Mr. Andlauer earned an 11.5-per-cent annual return on Andlauer Healthcare Group Inc., which he founded in 1991 and took public in 2019 at $15 a share. In late April, Atlanta-based United Parcel Service Inc. agreed to buy the transport company for $55 a share. While this is heady performance, the Ross-Arctros Index did even better, rising 14.4 per cent annually over the past five years. Over the past 12 months, franchise values jumped by 17.3 per cent, driven by deals such as the US$6.1-billion sale of the NBA's Boston Celtics. In 2023, Mr. Andlauer led a consortium that set a new high-water mark for the value of NHL franchises when they bought the Senators for US$950-million. The ownership group also includes former Farm Boy co-chief executive officer Jeff York and Ottawa real estate developer Bill Malhotra. If Mr. Andlauer cares about the economics of his investment, and billionaires typically care deeply about economics, a 17.3-per-cent-plus gain on the Senators means his group is already up about US$165-million. The Senators stand to become even more valuable as a new $11-billion, 12-year broadcast contract kicks in next year with Rogers Communications Inc., and the team potentially moves to a downtown arena. It took Mr. Andlauer 34 years to make his first billion by selling his logistics business. The surging economics of pro sports may make it far easier to make his second billion at the Senators, while potentially bringing home a Stanley Cup.
28-04-2025
- Business
'Trump Coins' lauds Trump for soaring gold prices. Experts point to economic uncertainty
A marketing email distributed this month by Trump Coins, a commemorative coin venture launched last year by President Donald Trump, attributes the soaring value of gold and other metals in recent weeks to the president's "return to the spotlight." "President Trump's bold stance on tariffs, American industry, and economic protection is pushing investors out of risky fiat and back into safe-haven metals," the marketing email reads. "Confidence in strong U.S. leadership is driving real demand." But some experts assert that the sudden surge in gold reflects not "strong U.S. leadership" or "Trump's ongoing momentum," as Trump Coins frames it -- but instead a consequence of financial uncertainty inspired by Trump's erratic economic policies, including his commitment to impose widespread tariffs on nearly all U.S. trading partners. The premise that rising gold prices evince a thriving U.S. economy runs "completely contrary to reality," said Paolo Pasquariello, a finance professor at the Ross School of Business at the University of Michigan. Experts who ABC News spoke with said that the value of gold often rises in times of economic turmoil, particularly during trade wars or anticipated inflation. "The fact that gold prices are going up right now sends as strong a message of displeasure with President Trump's economic policies as I can think of," Pasquariello said. In the weeks since Trump's self-styled "Liberation Day" -- when he announced a sweeping set of tariffs -- gold has notched several record highs. This week, the price of gold surpassed $3,500 per ounce for the first time. Meanwhile, markets have tumbled in recent weeks, and the International Monetary Fund warned Tuesday that "escalating trade tensions" have dimmed "both short-term and long-term growth prospects." On April 16, when Trump Coins sent the marketing email lauding "another new record" for gold, it said the reason "isn't just economic -- it's political." "Trump's return to the spotlight is reigniting belief in real value and asset-based security," the email said. "Central banks are stockpiling, buyers are doubling down, and Trump's ongoing momentum keeps pushing metals forward." But experts said that skyrocketing gold prices have often been linked to periods of instability -- offering the 2008 financial crisis and, more recently, Russia's invasion of Ukraine as examples. Despite its volatility, gold is "the quintessential safe-haven asset" in times of economic uncertainty, said Campbell Harvey, a professor of finance at Duke University's Fuqua School. Another explanation cited by experts for the precipitous rise in gold is that Trump's policies have shaken confidence in some of the top alternative safe-haven assets: the U.S. dollar and U.S. Treasury bonds. Depreciation in the value of the U.S. dollar and volatility in Treasury yields have made gold more attractive as investors look for a safe haven, experts said. Trump Coins frames itself as "the only medallions authorized and endorsed/designed by President Trump himself." The commemorative coins, which include gold and silver busts of Trump, emerged during the 2024 presidential campaign as one of several merchandising ventures Trump profited from -- a list that also included watches, sneakers, bibles and guitars. After his 2024 triumph, Trump unveiled a one-ounce "Victory Gold Medallion" -- with the president's face and signature pressed in solid gold -- for $3,645.47, a thousand-dollar upcharge compared to the price of an ounce of gold at the time. The "Victory Gold Medallion" now retails for more than $4,628, an increase of nearly $1,000 since late November and more than $1,300 higher than the current market price of an ounce of gold. Details about the terms of Trump's agreements with the merchandise company that sells his coins, JBCZ Group LLC, are not public. But experts said Trump has likely profited handsomely from this venture in light of gold's precipitous rise. As an investment strategy, experts say that other forms of gold may perform better in the long-run than Trump-branded coins. "If you want to invest in gold, it's best to actually use an ETF," said Harvey, referring to a security that allows investors to invest in an underlying asset without purchasing that asset. In contrast, solid gold bars -- or Trump Coins -- are more difficult to sell, Harvey explained, and "that means when you sell, you sell it at a discount."
