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There are a lot of different ways that you can invest your money and if you are smart you can become a millionaire in few years only by investing in the right things. If you earn money, you need to invest them and make them work for you. You can always keep cash in your bank account, but try not to have a lot of money that is sitting passively in your account. Nowadays, the most common type of investment is in real estate, stocks, or the crypto market. 

But entrepreneurs often are limited to those three rather than diversifying their funds in more places just to avoid losing money if any of the industries is falling. 

Every investor in these uncertain economic times is looking for stability and predictability. Sports teams investing can turn out to be a safe and profitable investment just because most teams have been around for more than a century with a loyal customer base. 

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So, you are starting with a strong base, and with little investment, you can earn a lot of money.

Does this mean that investing in sports teams is a safe investment?

Well, not so fast. Every investment has its pros and cons where the outcome is strongly determined by many factors, such as the budget for investing, market position, the popularity of the sport, and so on. 

Let’s jump to the pros and cons of sports investing and find out if it is the right choice for you.

Pros of Investing in Sports Teams

Demand

If we analyze the term “demand” which in economics is defined as the ability and the desire to purchase goods and services, then investing in sports teams sounds like a great idea due to their emotional chord with their audiences. It is hard to find a company with higher brand loyalty than sports teams.

Limited Competition

Depending on the sport you want to invest in, there is always limited competition that competes for the same prize. With that said, you remove the surprise factor of a new competitor jumping in the game.

If you decide to invest in a traditional company you might encounter “barriers to entry”, which is similar to the professional teams in top-class leagues like the NBA, Premier League, or NFL.

But you can slowly start at college football with lower investment and build a team that can tackle big-brand names.

Free Marketing

Some many sports journalists and media constantly write about what’s going on in the league. This is free marketing which can be very useful for generating additional income or promoting new merchandise.

Cons of Investing in Sports Teams

Economic Shocks

Even though sports teams have a lower economic impact than other sports, they are not immune from economic shocks. If we analyze the last year alone, the pandemic caused huge problems in the sports industry. 

Most of them started reducing athletes’ salaries due to lack of play and fewer sponsorship deals. Sports teams weren’t able to host fans on their matches, which is a significant income and most leagues postponed matches.

Additionally, from an economist’s perspective, the demand for attending sporting events, purchasing merchandise, and pay-per-view fluctuates due to the change in people’s income. Sporting activities and entertainment are considered a luxury, and that’s the first thing that goes away from someone’s budget if they experience a bad year financially.

High Costs

Most professional sports teams have high costs from paying athletes and stuff which is the biggest part of the team’s budget to managing stadiums and purchasing new players. This means that in order to achieve a higher ROI (Return on Investment) you need to make a good financial plan.

Sports teams have few sources of income (especially teams in the lower leagues), and if one of them is cut off, they’ll face serious trouble. 

The Bottom Line

Sports franchise investing can turn out to be a profitable proposition if it is done the right way. The sports industry is slowly rising over the years and this trend is expected to grow over the next 10 years. 

The sports market in 2020 was estimated at around $390 billion and experts predict an annual growth rate of 13.5% coming to a $440 billion industry, which is good news for new investors.

Just be aware to not invest with your heart only. You may have a favorite football team, or you got inspired watching one of the best basketball movies by TwinSpires and suddenly you want to invest in an NBA franchise. 

However, weigh the pros and cons and whether you are shooting yourself in the foot, because not only your favorite team has liquidity enough to make your investment profitable.

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