Over the weekend, political comedian Bill Maher revealed he invested in the New York Mets. As you could imagine, the polarizing figure’s investment spurred mixed reaction. Those who share his liberal views consider the investment to be solid, while those who disagree with the outspoken television show host pointed out the hypocrisy of the investment.
With $20 million, investors receive one share or 4 percent of the team’s ownership. The team is looking to sell ten to twelve such shares.
In return for the $20 investment, investors have benefits. From the financial perspective, investors are guaranteed a 3 percent annual compound return for six years if they choose to liquidate their investments at that point. The team also offers baseball perks like access to the team’s mascot, Mr. Met, one free parking spot, a business card identifying the investor as “Owner,” a luxury box in Citi Field, a free away trip with the team, and a free stay for spring training. The list goes on, but isn’t particularly Amazin’. $20 million should entitle an investor to a bucketful of perks, without additional fees.
Also missing from the list of benefits is any control of the team’s operations. Buying a share entitles the investor to become a limited partner, not a general partner. Limited partners receive the benefits of investment appreciation (or loss) while general partners have votes on decisions in addition to the financial benefits. If your dream is to own a baseball team because of your love for the game and you’re interested in testing your management skills to make a failing team a contended in the World Series, you can’t live that dream by being a limited partner.
It’s not clear whether Maher invested the full $20 million or teamed up with other investments whose contributions totaled $20 million.
While investing in a sports team is a risky endeavor, a guaranteed 3 percent annual compound return for six years isn’t as much of a risk. The opportunity cost may be high. Over the next six years, much better investments might come your way, but with your money locked up in an investment in the Mets, you could miss those opportunities. But for life-long Mets fans — or dedicated fans of any product or brand — logic rarely gets in emotion’s way. Loyalty can make you do stupid things, like staying in a job longer than you should, putting up with harmful interpersonal relationships, and refusing to shop around for the best deals.
Would you invest in a product or brand you’ve enjoyed as a fan your entire life?