Let’s simply say the NFL, NBA, MLB and NHL teams permitted buying and selling shares of the team like a stock. Each team would be estimated at a specific value and afterwards broken up into shares that people can buy. The team value would go up and down during the period based on different aspects like general record, getting to the playoffs or the Super Bowl or Championship video games.
I like the Chicago Bears so I chose to attempt an experiment based on my theory of the value of the team.
A company’s worth – its total value – is its market capitalization, and it is represented by the business’s stock price. Market cap (as it is commonly referred to) amounts to the stock price increased by the number of shares outstanding.
A stock with a $5 stock price and 10 million shares outstanding/trading is worth $50 million ($5 x 10 million). If we take this one step further, we can see that a company that has a $10 stock price and one million shares outstanding (market cap = $10 million) is worth less than a business with a $5 stock price and 10 million shares outstanding (market cap = $50 million). Therefore, the stock price is a relative and proportional value of a business’s worth and just stands for percentage changes in market cap at any offered moment. Any percentage changes in a stock price will lead to an equal percentage change in a business’s value. This is the reason why investors are so concerned with stock prices and any changes that could occur since a $0.10 drop in a $5 stock can lead to a $100,000 loss for shareholders with one million shares.
The next logical concern is: Who sets stock prices and how are they computed? In simple terms, the stock price of a business is calculated when a company goes public, an event called an initial public offering. This is when a company will pay a financial investment bank a great deal of cash to make use of extremely complex formulas and appraisal strategies to derive a business’s value by determining how many shares will be offered to the public and at what price. A business whose value is estimated at $100 million may want to provide 10 million shares at $10 per share or they may really want to issue 20 million at $5 a share.
With this information I figured out that the Bears would sell 49 % of the company and the amount of shares being sold would approximate around 463 million dollars. Let’s simply state the Bears decide to offer shares at $10.00 per share I would be purchasing them all day long.
If an investor does not wish to sell the shares quickly, he/she can constantly keep the shares with them and wait for the right time to sell as companies who are going public or noting their shares for the very first time on the exchanges likewise typically provide their shares low-cost, and might go on to become future success tales.
It is an intriguing idea and one that sooner or later the NBA, NFL, MLB or NHL may take a look at selling teams to the Public. Some teams like the Miami Dolphins are already publicly held by other sports stars, and superstars of the music market, and in the NBA, teams are having such huge money issues this might be a real option.