Sal Galatioto, the King of Sports M&ABy
Last year Sal Galatioto helped the Ricketts family buy the Chicago Cubs for $845 million. This year he helped sell the Charlotte Bobcats of the National Basketball Assn. to Michael Jordan for $275 million. Now Christopher J. Cohan has hired him to sell the NBA's Golden State Warriors, and he's working on the sale of the National Hockey League's Dallas Stars for Thomas O. Hicks. Over the last decade, while working for Société Générale (SCGLY), then Lehman Brothers, and finally his own firm, Galatioto has helped buy or sell 14 professional sports teams, making him a leader in this corner of the mergers and acquisitions world.
There is no official ranking of sports M&A, but the way Galatioto keeps score, he's in first place. His sports-team transactions accounted for nearly 40 percent of the market's $10.1 billion in deals over the past 10 years, he says. Goldman Sachs and JPMorgan Chase are also active in the field. "There's only a handful of deals," he says. "If you don't get 30 or 40 percent of those deals and [sports is] the only thing you do, then you're not going to be a viable business." Between transactions, he says, his nine-person Galatioto Sports Partners does "some financing, we do some arena and stadium advising work, we do some expert testimony, we do dispute resolution, whatever we can do to generate income to pay the bills."
Galatioto works out of a Manhattan office crowded with replica stadiums and sports helmets commemorating deals. A photo of Galatioto with New York Yankees owner George M. Steinbrenner hangs near one of a wild hog he shot in Texas in 1999.
Born in Sicily and raised in Brooklyn, Galatioto, 58, got involved in sports when he was in charge of the East Coast region for Société Générale and looking for ways to increase revenue. He built a business lending money to professional teams. Then he asked the bank to let him set up a specialty practice within the bank to focus on sports. "Management there thought I was nuts," he says. "The East Coast region had 30 employees. It was the biggest region the bank had in North America. Now I was going to go out with two guys and do sports."
Despite the bank's doubts, he went ahead. In 1999 he helped Dan Snyder buy the Washington Redskins for $800 million, a record at the time for an NFL team. A few years later he moved the whole practice to Lehman Brothers because he believed the Lehman name would help him land more deals. Five years ago, he left to start his own shop.
Tom Ricketts, chief executive of Chicago's Incapital, retained Galatioto when his family decided to go after the Cubs. "We needed someone who was an expert, who'd been in those trenches a long time," says Ricketts.
On the Cubs deal, Galatioto faced plenty of hurdles. The housing bubble burst. The economy tanked. The Cubs' owner, Tribune Co., entered bankruptcy. Galatioto "just kept running through brick wall after brick wall for us," Ricketts says. "We got to the finish line of a long, tedious negotiation only to find out it would be difficult to get financing. They stepped up, hacked through it, and got us a deal that worked."
Three and a half years ago, Galatioto made a big play for basketball business when he hired Russ Granik, who had retired as the NBA's deputy commissioner. He wooed Granik over Cuban sandwiches on paper napkins. Granik recalls having misgivings: "I said, 'Well, you know, I'm not a banker, and I'm not particularly a salesman.' He said, 'Yeah, but you know sports owners.' " Granik is now vice-chairman, advising clients on league practices and labor issues. The firm's other staffers include several of Galatioto's former students from the sports business class he teaches at Columbia Business School.
Galatioto is considering opening an office in Europe but otherwise doesn't have expansion plans. He credits the firm's small size and personal approach for its success. Sports-team transactions typically involve a few hundred million dollars, and Wall Street firms "aren't going to put the A team on a $250 million deal."
The bottom line: Concentrating on one small slice of the merger business, Galatioto has made himself a key player in the big-league sports economy.