When Derek Jeter retired from baseball in 2014, he and his advisors started having meetings with power players in the financial world with the audacious ask to run a Major League Baseball franchise like a controlling owner — but have someone else put up most of the money.
Jeter pulled it off in 2017. He made a deal to run the business and baseball operations of the Miami Marlins despite having just a 4% stake with the backing of money manager Bruce Sherman.
Sources told ESPN’s Jeff Passan on Tuesday that LeBron James had become a partner in Fenway Sports Group (FSG), the parent company of the Boston Red Sox. It was part of a larger maneuver from Fenway, which took on a $750 million investment from Redbird Capital that valued the firm at more than $7 billion including the Red Sox, Liverpool FC, Rousch Fenway Racing and other media and real estate holdings.
This was a significant step in the path James very well may take to realize a goal of becoming the controlling owner of a pro sports franchise. He could do it by following the avenue Jeter blazed with lessons from former MVPs turned owners like Michael Jordan and Magic Johnson.
“If LeBron retired tomorrow, he probably could put together a group with enough capital to buy an NBA team in a short period of time,” said an investment banker who has advised on NBA team sales in the past. “The trick is finding a group that would put up that kind of money and allow him to be the controlling partner if he’s not putting in the most money. That’s a harder deal to strike. But he is the type of athlete and businessman who might be able to do it.”
For James, his long and expanding relationship with FSG could eventually be that type of vehicle.
James and partner Maverick Carter first joined primary owners John Henry and Tom Werner in 2011 when he acquired 2% of Liverpool FC as part of a marketing deal with FSG. Now, James is in business with Redbird’s Gerry Cardinale, who has a long history of making deals with sports teams like the New York Yankees and Dallas Cowboys and recently bought half of the XFL with partner Dwayne Johnson.
Forbes recently projected James to surpass $1 billion in career earnings from his NBA salary and endorsement deals this year. That estimation doesn’t take into account his investment success.
For example, his initial $6.5 million stake in Liverpool FC is now believed to be worth more than $40 million as the team climbed from the $477 million FSG paid to more than $2 billion today. Among other scores, he brought in an eight-figure haul when Apple purchased Beats, where James had an equity stake, for $3 billion back in 2014.
But even with his accumulated wealth, James would likely need partners to purchase an NBA team with current average values at $2.2 billion per Forbes. And with two years left on his contract and plenty of spring in his step, James could be years away from entering the market as prices continue to appreciate.
Over the years, numerous athletes have tried to assemble groups to purchase teams with little success. Recently, Kevin Garnett announced on social media an attempt to put together a bid for the Minnesota Timberwolves had failed.
Johnson bought 4.5% of the Los Angeles Lakers for $10 million in 1994 and sold it in 2010 for more than $50 million, according to reports. He expressed interest in joining a group to buy the Detroit Pistons but it didn’t materialize. Later he spent the $50 million to buy 4% of the Los Angeles Dodgers but is not involved in day-to-day control.
Jordan tried and failed to buy the Milwaukee Bucks and then made a Jeter-like deal when he got equity in the Washington Wizards when he became team president in 2000. It ended badly three years later when Jordan was dismissed by the team after his final retirement as a player.
In 2006, Jordan bought a share of the Charlotte Bobcats and began overseeing basketball operations. In 2010, he became the first former player to have controlling interest through a remarkable confluence of events. Owner Bob Johnson sold the team at a loss — the $300 million expansion fee in 2004 had shrunk to $275 million at the time of sale — and the NBA approved a deal that turned over control to Jordan with only $30 million down, according to the Charlotte Observer, because he was assuming so much debt.
James is unlikely to find an arrangement like Jordan, whose franchise is now valued at $1.5 billion. But James has studied the paths of those few who have come before him — including Grant Hill, who owns a piece of the Atlanta Hawks, and Elliot Perry, owns a piece of the Memphis Grizzlies — who have moved from the floor into ownership.
He’s spent the last decade preparing for such a move, though he’s been careful not to imply it’s an obsession. Or that he’d absolutely want to have the type of control Jeter now has or Jordan sought for years.
“I don’t think about it on a day-to-day basis,” James said in 2019 when discussing ownership aspirations. “I believe if I wanted to, I could own a team or be part of a basketball team. I know I got so much knowledge of the game that…once I stop playing, I just don’t want to get away from the game.”
In 2020, the NBA allowed hedge funds the ability to purchase minority shares in teams, up to five teams at once and as much as 20% per franchise, though no sales have yet closed. Active NBA players are forbidden from investing in these funds just as they’re prohibited from owning any part of a team while they’re playing.
But allowing funds to take shares could eventually pave the way for more ex-players to get involved in NBA ownership by becoming investors.
Last year, Kevin Durant bought a 5% piece of the Philadelphia Union of the MLS and has hinted at a desire to purchase an NBA team someday as well.
Where this pursuit ends is still unclear. But one thing isn’t, James is getting closer.