Between modern chivalry and show-off: The billionaires' new toy

Billionaires love to buy sports teams. It is an especially ostentatious status symbol. You can purchase a wonderful and expensive work of art, but in the end, it hangs in your home. And how many cars, private jets, mansions, or yachts do you really need? A sports club, on the other hand, is constantly in the public eye and at the center of media attention. In the NBA there are 30 teams, so once you have purchased one of them, you have joined an exclusive club that only 29 other people in the world are members of. This is a kind of modern chivalry: an entry ticket to the cultural and economic elite, and of course, to fame as well.

Some of these billionaires purchase clubs because of a sentimental connection to a team that they or their parents supported in their childhood, but many look at the matter as a cold economic business. This is a cash flow that is almost independent of anything, and around the sports activity, revenue channels that roll in billions grow: real estate, advertising rights, and the use of stadiums for concerts, alongside tax benefits that owners receive from the state. When that billionaire comes from the media world, he also gains access to the very profitable market of sports broadcasting. Ted Turner, for example, cashed in nicely from the combination of ownership of the Atlanta baseball team and the broadcasting rights of TBS. And in general, it doesn't exactly hurt business when you can host the President of the USA in the VIP box to watch a football game.

At almost any price, these are some of the reasons why Jeff Bezos, the third richest man in the world, purchased last week together with a group of investors that also includes one of the founders of Facebook, 30 percent of the ownership of Liverpool. They also explain why Bob Iger, the former legendary CEO of Disney, and Joshua Kushner decided to buy the Los Angeles Lakers. But money, status, and access to the exclusive club are not the whole story.

The price Bezos paid for his share — 1.65 billion dollars — reflects quite accurately the value of Liverpool. The agreement shows that there is an agreement between the parties to hold a discussion in the future about the possibility that he will become the main shareholder. He is entering a brand with a name and enormous global marketing capabilities. If you are a Liverpool fan, you should wear both a snow coat and sunglasses: the FSG era, which has now sold part of its holdings to Bezos, brought golden days back to the club after a long decline and simultaneously jumped its value. Bezos arrives with a cash reserve that can raise Liverpool's budget to the true economic summit of European football, alongside Manchester City, Real Madrid, and PSG.

On the other hand, the fans surely remember the big promises that accompanied the purchase of the "Washington Post" by him. Even then, it was a huge global brand; since then, it has been sinking until it almost drowned. The story of Kushner and Iger is slightly different. The two sought to purchase a sports team or a sports entity at almost any price. It started with an offer to purchase a stake in the management rights of the World Cup — an attempt that blew up in the face of FIFA President Gianni Infantino — continued with an attempt to buy a team in Las Vegas, and ended last week, when within three days of negotiations they closed the purchase of the Lakers, another huge international brand, for 12.5 billion dollars. This is a sum that is 2.5 billion dollars — or 25 percent — higher than what the previous owner of the club paid only 14 months earlier.

Did the Lakers really increase their value by 25 percent in just over a year? It cannot be. Did Iger and Kushner simply pay way too much? It is also hard to believe that. These are two business sharks. They paid the amount that they believe the Lakers will be worth for them. People of tomorrow. In other words, in both cases, these are speculative purchases. In a world where people bet on almost every pip today, Bezos, Iger, and Kushner are putting their money on sports teams.

Bezos's case is particularly interesting. He and the people with whom he purchased part of Liverpool come from the digital world. These are the people of tomorrow, who invest capital in artificial intelligence and technologies designed to replace some of the things that humans do today. And here is perhaps the most fascinating part of their bet. I think that hosting the World Cup matches in the USA in the summer and the dizzying success of the tournament also have great weight in this: behind all the economic calculations hides an investment in something sentimental and emotional. It relies on the connection that is very difficult to sever between a person and his team, his city, and his identity. These three investors are effectively saying: we have understood and internalized that tomorrow belongs to artificial intelligence. We will introduce it into our businesses as well and will know how to generate billions through it. But alongside everything that will change in the future, there will remain things that have always been here and that no technology will be able to replace. Emotion, for example. Or the feeling that a championship brings with it. Or a victory of the team you support.

A stock on the rise. And of course, alongside the emotion, there is also a very cold consideration: the graph. The rise in the value of sports clubs is in itself an excellent reason to purchase them. When the American purchasing group bought Liverpool in 2010, the club was worth about 300 million dollars. 16 years later, a part of it was sold for a value close to 5 billion. LeBron James invested 6.5 million dollars in Liverpool in 2011, and later upgraded his agreement with FSG and became the owner of one percent of all its holdings — which include, among other things, also the Boston Red Sox. After the current deal, the value of his stake in Liverpool alone stands at about 60 million dollars. This is an average annual return of 16.6 percent. A number that is almost hard to believe is real.