Bigtime Losers

Behold the spectacle of the Bad Owner. He says he wants to win — really, he does! — but he never seems to have a clue as to how to go about it. (James Dolan of your New York Knicks, ladies and gentlemen?) Sometimes he spends his money so freely he appears to have forgotten the business acumen that made him rich in the first place. (How about the Texas Rangers’ owner, Tom Hicks, the original over-payer of Alex Rodriguez?) In other cases, he can’t bring himself to bid for free agents and keeps his payroll so low that players flee the franchise as soon as they can. He chews through coaches — or keeps them too long. He surrounds himself with mediocre executives. Even though he gets top draft picks almost every year (and, in the National Football League, an easier schedule) to compensate for all the losing, his fortunes never seem to change. (Bill Bidwill and the Arizona Cardinals, anyone?)

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Clearly, he’s not in it for the glory — there isn’t any for him. Frustrated fans call for his head. Sportswriters mock him. At times his own league clashes with him. And yet, amazingly, he holds on to his wreck of a team, year after blessed year. How many decades has Carl Pohlad owned the Minnesota Twins? (Two and a half, as it happens.) Why won’t the Dolans — Charles, the chairman of Cablevision, is the one who appointed his son James to run the Knicks — put the team on the block? When will Peter Angelos, the owner of the Baltimore Orioles, realize that he should stick to suing asbestos companies? Why does the Bad Owner seem so impervious to it all?

Actually, there is a reason, a very good one. To own a franchise in any of the three major sports — football, baseball or basketball — is to enter a club in which it is nearly impossible to come away a financial loser. If you doubt me, direct your gaze toward Los Angeles, where the granddaddy of Bad Owners has presided over one franchise for nearly three decades. I mean, of course, Donald T. Sterling.

Since 1981, Sterling has owned the Los Angeles Clippers, an N.B.A. team and one of the sorriest outfits in the history of pro sports. Its high point came a few years ago, when the Clippers advanced to the second round of the playoffs. For two decades, Sterling had one of the lowest payrolls in the league, refusing to chase after free agents or even re-sign his players when they became eligible for free agency. The franchise’s best moments were said to be the draft-lottery party Sterling threw each year.

Sterling bought what was then the San Diego Clippers for .5 million. A few years later, in 1984, he moved them to Los Angeles, the site of his real estate empire, and into the Los Angeles Memorial Sports Arena. In the words of Steve Perrin, a k a “ClipperSteve,” who runs a Web site dedicated to the Clippers, the arena was “a scary building in a scary neighborhood.” It lacked suites or luxury boxes, and in a typical year the team drew around 8,000 fans per game. According to Andy Roeser, who is the team president and has run the Clippers for over 20 years, the team regularly lost money. One reason Sterling may not have spent much money on the team is because he had very little to spend without digging into his own pockets. Still, Sterling turned down several offers to relocate the team to Anaheim, where investors were waving money at him. It was said he didn’t want his friends to have to drive that far to see the Clippers play.

In 1999, the Clippers moved into the brand-new Staples Center. Without question, it is the one thing Sterling has done to enhance the value of his franchise, and it has allowed him to loosen the purse strings a little. His payroll has climbed to million (the middle of the pack for the N.B.A.), and for the first time he has a coach, Mike Dunleavy, who has lasted more than three seasons. “We’ve become marginally profitable since moving into Staples,” Roeser told me. All the same, the team is the No. 3 tenant in the building, behind the Los Angeles Kings hockey team and the city’s true glamour franchise, the N.B.A.’s Lakers. The Clippers can’t charge anywhere near what the Lakers get for tickets, have much poorer TV and radio deals, and draw fewer fans — around 16,000 a game compared to the Lakers’ 19,000. And the Clippers still stink. After a brief moment of playoff glory, they are back in their accustomed spot near the bottom of the league.

So here’s the kicker. Despite the team’s dim history — and Sterling’s unwillingness or inability to do what it takes to build a winner — his .5 million investment is now worth nearly 0 million, according to the latest appraisal by Forbes magazine. And the Clippers could well be worth a great deal more. When I mentioned the Forbes estimate to Roeser, he scoffed. “Mr. Sterling would never sell for 0 million,” he told me. “He wouldn’t sell it for 0 million.” That’s why the Bad Owner doesn’t sell, the way a normal businessman would be forced to if he ran his company into the ground. No matter what the Bad Owner does, the value of the franchise only goes in one direction: up.

With one big exception other than sports, which I’ll get to shortly, there is a direct correlation between running a company well and a rise in its value. Companies that are well run make more profits; as their profits rise, so does their stock price. General Electric is one of the most profitable companies in the world, and it is also one of the most valuable. That’s how things normally work.

Except in sports. Because there is such a limited number of franchises — just 30 N.B.A. teams, for instance — there are always going to be billionaires, or partnerships of billionaires, lining up to buy them. In Seattle, the SuperSonics were an N.B.A. franchise that just about disintegrated during the short stewardship of Starbucks chairman Howard Schultz.

No matter! Having bought the team for 0 million in 2001 — and then thoroughly mismanaging it over the next five years — Schultz sold the SuperSonics in 2006 for 0 million. The buyers were businessmen from Oklahoma City, who, in all likelihood, will eventually move the team to their hometown. (The city of Seattle has filed a quixotic suit to prevent that from happening.) So even if the team wasn’t worth 0 million in Seattle, it was worth that much somewhere else.

Certainly a good owner can do things that add value to a franchise. But far more important is whether the team is in a big media market and plays in a stadium with modern, high-priced luxury boxes.

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Joe Nocera is a business columnist for The New York Times.