The Jets: Worth A Gazillion?
If the value of a pro football franchise were pegged to the sports icons it can claim, the New York Jets would be a gold mine. So what if they haven't bagged a Super Bowl in 30 years? For fans of a certain age, there has never been a quarterback as hip as Joe Namath. And you have to hark back to the days of Vince Lombardi to find a coach as successful (and crusty) as current Jets sideline general Bill Parcells.
These days, though, the worth of a team has little to do with who's calling the signals or hiking the ball and everything to do with the stadium in which the ball is being hiked. Franchises that play in glorified country clubs--stadiums crammed with luxury boxes and upscale amenities--command unheard-of prices. Conversely, teams that offer fans only a winning tradition no longer fetch top dollar.
So it wasn't a complete surprise this year when clubs in Cleveland ($530 million) and Houston ($700 million) attracted record bids despite never having won so much as a coin flip in the National Football League. More important was that both cities had state-of-the-art sports palaces rising from their downtowns. Similarly, it was not a surprise when the Washington Redskins, who play in luxury-laden and newly renamed FedEx Stadium, changed hands for $800 million.
At the other end of the stadium spectrum are franchises like the Jets, which went on the block last spring when team owner and oil company magnate Leon Hess died. True, the Jets boast the most populous hometown in the NFL. And the team shook off a decades-old slump last season to advance within a game of the Super Bowl. But for investors, the Jets still come up short of a first down.
What they lack is the right stadium deal, and not just because they're the only major sports franchise that plays in a venue--Giants Stadium--named for somebody else's team. In a decade of low- and no-rent deals for NFL tenants, the Jets made one of the highest gridiron payments in the league last year: $3.9 million. A shortage of revenue from sources like suites and club seats also is off-putting to investors. Giants Stadium was a rich fan's paradise when it sprouted in New Jersey's Meadowlands in 1976. But its 142 club seats are a mere 14,858 fewer than at two-year-old FedEx Stadium.
NUMBERS GAME. "I can't imagine anyone generates less revenue from their stadium deal than the Jets," says Randy Vataha, president of Game Plan LLC, a sports investment bank. The Jets support a price of $200 million to $300 million playing under their present lease at Giants Stadium, say sports valuation experts.
But put the team in a new stadium loaded with amenities--ah, now you've got something. "Suddenly, you're talking about one of the three or four most valuable franchises in sports," Vataha says. "For a visionary, the opportunity [in owning the Jets] is greater than for most NFL teams."
No doubt, the arithmetic intrigues investors who have been kicking the tires of the team. Among them: Charles F. Dolan, chairman of Cablevision Systems; Sam Grossman, a Phoenix real estate developer; Robert Wood Johnson IV, an heir to the Johnson & Johnson fortune; and John McMullen, owner of the National Hockey League's New Jersey Devils.
TURF FIGHT. Then there's the ownership group from cyberspace. From a virtual headquarters at Buythejets.com, three Jets fans are leading a grassroots campaign to buy the team. So far, they claim to have heard from 11,000 fans pledging a total of $20 million. But their chance of success appears to be zip. Last month, NFL Commissioner Paul Tagliabue nixed the bid, saying it doesn't conform to league rules that limit ownership to 25 individuals and require a lead investor to hold 30% of a franchise. The NFL sees Buythejets.com "as a threat to the way they do business," says John Crotty, a former budget analyst for the City of New York and one of the Web site's organizers. "But you can't keep going around holding up cities and fans and at the same time keep saying you're working in the best interests of the people. The people we talk to want us to be able to bid."
Whoever the owners may be, they will probably have their team late this year or early in 2000. That's when the real maneuvering begins. The new management could break the lease at Giants Stadium, but that would be expensive and probably foolish--unless there's another football stadium hidden in the New York metropolitan area that would be an improvement. More likely, new investors would sit tight at the Meadowlands while they begin combing their home turf for a new stadium site. Then the Jets would move when their lease is up after the 2008 season.
A winning bid of $500 million or more--which seems a certainty--virtually forces the team to take flight. "To service that debt would require a cash flow almost impossible to have in our stadium with the leases of the two teams," says Wellington Mara, co-owner of the New York Giants, which has shared the stadium with the Jets since 1984.
It'll be up to the Jets' new ownership to figure out how to make the numbers work. And if they get a moment, maybe they can pick out a few good football players, too.