Pros and Cons of Peyton Manning's Reported Stake in the Memphis Grizzlies
SCOOP:Peyton Manning has agreed in principle to become part-owner of the Memphis Grizzlies.— Chris Vernon (@ChrisVernonShow) October 4, 2012
ESPN's Darren Rovell confirmed the report after speaking with a source close to Grizzlies incoming owner Robert Pera:
A source close to incoming Grizzlies owner Robert Pera has confirmed @chrisvernonshow report that Peyton Manning will be part owner.— darren rovell (@darrenrovell) October 4, 2012
Manning surely didn't make this decision without doing his due diligence to make sure it's going to be a profitable venture, but becoming an owner of any pro sports franchise comes with its fair share of risks.
With that in mind, let's take a look at the potential pros and cons that could arise from this development.
Pro: Manning Is a Profitable Endorser
It's no secret that Peyton Manning is one of the most profitable names in advertising.
Whether it be Direct TV, Sony, Mastercard or Sprint, Manning makes people smile, and the companies that use him to endorse their products make money.
According to SI.com's Fortunate 50, Manning made $13 million in endorsement deals in 2011—the No. 7 highest-paid athlete in America. Combined with his $18 million salary, Manning made more money than any other NFL player.
Robert Pera is certainly banking on Manning's mass appeal to help bolster what has previously been poor revenue, as well as improve attendance:
- According to Forbes.com, the Grizzlies rank No. 29 of 30 NBA teams in terms of value, at $269 million. To put this number in perspective, the Los Angeles Lakers rank No. 1 with an approximate value of $900 million.
- According to ESPN.com, the Grizzlies rank No. 20 in the NBA in terms of attendance, with 15,704 fans per home game.
Con: Michael Jordan Proved That a Profitable Name Doesn't Always Win
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Michael Jordan, the former undisputed champion of athlete endorsements, has proven that a big name doesn't always improve the prospects of a small-market team.
In 2011, the Charlotte Bobcats ranked No. 25 in the NBA in attendance, with an average of 14,757 fans per game. Additionally, Forbes.com lists the Bobcats as the No. 26 ranked NBA team in terms of value, at $277 million.
Granted, Jordan's involvement with the Bobcats is much different than what Manning is getting into.
Jordan took over as the majority owner of the Bobcats in 2010. He became a minority owner in 2006 and was heavily involved in managing the team from that point.
Unfortunately for the Bobcats, Jordan hasn't done a good job.
The Bobcats have failed to put together a winning team, which has a lot to do with the franchise's poor record, poor attendance numbers and poor financial status.
Pro: Manning Is Revered in Tennessee
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Peyton Manning attended the University of Tennessee for four years.
He routinely wears orange ties to formal events in honor of his time there, and according to the AP, "Ashley Manning once lived in Memphis and married Peyton there on St. Patrick's Day in 2001."
He's investing in a community where people revere him for his time at Tennessee, which will surely have a positive impact on the interest folks take in the Grizzlies.
Con: Manning Could Lose Money
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As with any investment, there's a chance Manning could lose.
The amount of money he's putting into the Memphis Grizzlies is undisclosed at this time, but given the fact that Robert Pera reportedly agreed on a $350 million price tag to buy the team (h/t ESPN.com's Marc Stein), you can bet it's not a small figure.
The Grizzlies haven't been a profitable team the past five years. Forbes.com estimates the franchise has lost $25 million over that period of time.
Unless something chances soon, Manning could end up regretting his decision to invest in this team.
Pro: The Grizzlies Are on the Rise
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The Memphis Grizzlies are a young team on the rise.
The past three seasons, this team has improved every year, missing the playoffs with a sub-.500 record in 2009-2010, taking the No. 8 seed with a record just over .500 in 2010-2011 and taking the No. 4 seed in 2011-2012 with a .621 winning percentage.
With stars like Mike Conley Jr., Rudy Gay, Zach Randolph, Marc Gasol and Tony Allen, this team is set to make a deep run in the playoffs for years to come.
Additionally, with backers like Manning, Justin Timberlake and Penny Hardaway (h/t CBSSports.com), the odds for financial success are improved, as long as this team continues to improve and win games.
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