{"id":24515,"date":"2015-04-17T13:05:31","date_gmt":"2015-04-17T18:05:31","guid":{"rendered":"http:\/\/law.marquette.edu\/facultyblog\/?p=24515"},"modified":"2015-04-17T13:05:31","modified_gmt":"2015-04-17T18:05:31","slug":"crowdfunding-and-sport-how-soon-until-the-fans-own-the-franchise","status":"publish","type":"post","link":"https:\/\/law.marquette.edu\/facultyblog\/2015\/04\/crowdfunding-and-sport-how-soon-until-the-fans-own-the-franchise\/","title":{"rendered":"Crowdfunding and Sport: How Soon Until the Fans Own the Franchise?"},"content":{"rendered":"

\"Jamaika-Bob\"<\/a>The latest issue of the Marquette Sports Law Review is now available online<\/a>.\u00a0 This is a faculty symposium issue.\u00a0 I am proud to have my article, “Crowdfunding and Sport: How Soon Until the Fans Own the Franchise?,” included in\u00a0this issue.\u00a0 Here is the introduction.<\/em><\/p>\n

The Green Bay Packers football team operates as a nonprofit corporation that has been publicly-owned since 1923.\u00a0 Since that time, the franchise has raised capital by selling shares of stock in five different stock offerings, and there are currently over 350,000 individual members of the public who are shareholders of the team.\u00a0 These shareholders are the joint owners of a sports franchise that is currently valued at $1.375 billion.<\/p>\n

The public ownership of the Green Bay Packers is often noted in the media, and it is generally praised for contributing to the team\u2019s strong tie to the surrounding community.\u00a0\u00a0However, it is highly unlikely that any other N.F.L. team will follow in Green Bay\u2019s footsteps.\u00a0 Public ownership of franchises is actually prohibited under the current N.F.L. Constitution, and Green Bay\u2019s ownership structure persists solely because of a grandfather clause that excludes the Packers from the prohibition.\u00a0 Moreover, the unique nature of the Packer\u2019s public ownership structure extends beyond the boundaries of the N.F.L.\u00a0 The Green Bay Packers are currently the only wholly publicly owned franchise among all of the four major sports leagues (football, baseball, basketball and hockey) in the United States.<\/p>\n

There is no reason why publicly owned professional sports teams cannot thrive and succeed at the same level as privately owned teams.\u00a0 While public ownership of professional sports teams is relatively rare in the United States, it is common overseas.\u00a0 Notable examples of publicly owned soccer teams are Real Madrid and Barcelona FC, both of which play in Spain\u2019s Liga Nacional de F\u00fatbol Profesional, commonly known as \u201cLa Liga.\u201d\u00a0 These teams are operated as \u201csocios,\u201d a form of nonprofit organization where fans of the club pay an annual membership fee for the right to buy season tickets in a special section of the stadium and the right to vote on certain management decisions.\u00a0 Another team that plays in La Liga, Real Oviedo FC, has maintained consistent and significant numbers of public owners despite the relative disadvantage of being based in the region of Asturias, far from Spain\u2019s major population centers.<\/p>\n

It is not just that the United States lacks more than one example of a major league team that is wholly owned by the public.\u00a0 It is also uncommon for American major league sports teams to have a minority ownership stake comprised of public shareholders.\u00a0 In recent decades, the private owners of several major league franchises have experimented with establishing and maintaining a publicly owned minority stake, seeking to inject additional capital into their team whilst still maintaining control over the enterprise.\u00a0 However, in each instance the private ownership group used a stock offering in order to create a minority interest, only to subsequently abandon the structure and negotiate the sale of the entire team to new owners.\u00a0 For example, the Cleveland Indians baseball team held a public offering of shares in 1998 but went wholly private again in 1999.\u00a0 The Boston Celtics basketball team had a longer run with minority public shareholders, holding a public stock offering in 1986 but eventually reverting to wholly private ownership in 2002.<\/p>\n

Today the ownership of major league sports teams in the United States remains almost exclusively the province of large corporations, wealthy individuals or ownership groups comprised of these same two actors.\u00a0 What explains the failure of more major league teams to pursue and maintain some component of public ownership?\u00a0 Certainly, the increased public scrutiny of team and owner finances that comes with public ownership can act as a deterrent.\u00a0 However, the biggest barrier to public ownership may be the combination of high valuations of professional sports teams, which today can run into the billions of dollars, and the effort and expense necessary in order to sell large amounts of stock through the public markets.\u00a0 Simply put, buying a majority or minority stake in a major league team requires raising a great deal of money, and the traditional method of selling stock to the general public through a registered public offering adds significant legal, accounting and underwriting fees on top of the amount to be raised.<\/p>\n

Recently, some commentators have pointed to crowdfunding as an innovative capital raising technique that could be used to create more publicly owned sports teams in the United States.\u00a0 \u201cCrowdfunding\u201d is the term used to refer to raising significant amounts of capital by taking advantage of the world-wide web: funds are solicited in small amounts from a broad segment of the general public using the vehicle of the internet.\u00a0 Private individuals and entrepreneurs have been turning to crowdfunding in recent years in order to raise money for a variety of profit-making enterprises, such as the creation of digital music, movies, and small businesses.<\/p>\n

In the sports world, crowdfunding has become a popular fundraising vehicle in several contexts.\u00a0 It rapidly has become one of the primary means whereby individual amateur athletes solicit donations in order to support their training and competition costs.\u00a0 It is also increasingly being used by amateur and professional sports teams in order to raise money and build community ties.\u00a0 In one instance, crowdfunding was an integral part of a fledgling professional football league\u2019s business plan to create eight franchises, each one with a public ownership component.\u00a0 Crowdfunding was even advocated as a way for the general public to remove Donald Sterling as the owner of the Los Angeles Clippers basketball team, by providing the funds necessary for the purchase of the team.<\/p>\n

This article will discuss the future potential and limitations of crowdfunding as a means of financing the public ownership of professional sports teams in the United States.\u00a0 Part II of the article explains the different models of crowdfunding (pure donation, reward\/membership, and equity-owner) and the legal environment that applies to each model, including provisions of the federal securities laws that until recently have constrained the use of equity crowdfunding.\u00a0 In Part III, this article examines the changes enacted by the federal JOBS Act, as well as recent developments in state law.\u00a0 These reforms were intended to lessen the legal constraints on crowdfunding when used to sell ownership shares in a business.\u00a0 Whether or not these legal reforms will prove sufficient to inspire more professional sports teams to sell stock to the public is the subject of Part IV.\u00a0 Finally, Part V of this article concludes that, while it is unlikely that the Green Bay Packers will be joined by any other major league teams with public shareholders, the adoption of minor amendments to the JOBS Act and to state law could facilitate the use of crowdfunding in ways that lead to the increased public ownership of sports teams in the minor leagues or in newly created professional sports leagues.\u00a0 In this way, crowdfunding eventually may allow the fantasy of many fans \u2013 to be an owner of the team that they root for \u2013 to become a reality.<\/p>\n

Click here <\/a>to download\u00a0the entire article.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The latest issue of the Marquette Sports Law Review is now available online.\u00a0 This is a faculty symposium issue.\u00a0 I am proud to have my article, “Crowdfunding and Sport: How Soon Until the Fans Own the Franchise?,” included in\u00a0this issue.\u00a0 Here is the introduction. The Green Bay Packers football team operates as a nonprofit corporation […]<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ocean_post_layout":"","ocean_both_sidebars_style":"","ocean_both_sidebars_content_width":0,"ocean_both_sidebars_sidebars_width":0,"ocean_sidebar":"","ocean_second_sidebar":"","ocean_disable_margins":"enable","ocean_add_body_class":"","ocean_shortcode_before_top_bar":"","ocean_shortcode_after_top_bar":"","ocean_shortcode_before_header":"","ocean_shortcode_after_header":"","ocean_has_shortcode":"","ocean_shortcode_after_title":"","ocean_shortcode_before_footer_widgets":"","ocean_shortcode_after_footer_widgets":"","ocean_shortcode_before_footer_bottom":"","ocean_shortcode_after_footer_bottom":"","ocean_display_top_bar":"default","ocean_display_header":"default","ocean_header_style":"","ocean_center_header_left_menu":"","ocean_custom_header_template":"","ocean_custom_logo":0,"ocean_custom_retina_logo":0,"ocean_custom_logo_max_width":0,"ocean_custom_logo_tablet_max_width":0,"ocean_custom_logo_mobile_max_width":0,"ocean_custom_logo_max_height":0,"ocean_custom_logo_tablet_max_height":0,"ocean_custom_logo_mobile_max_height":0,"ocean_header_custom_menu":"","ocean_menu_typo_font_family":"","ocean_menu_typo_font_subset":"","ocean_menu_typo_font_size":0,"ocean_menu_typo_font_size_tablet":0,"ocean_menu_typo_font_size_mobile":0,"ocean_menu_typo_font_size_unit":"px","ocean_menu_typo_font_weight":"","ocean_menu_typo_font_weight_tablet":"","ocean_menu_typo_font_weight_mobile":"","ocean_menu_typo_transform":"","ocean_menu_typo_transform_tablet":"","ocean_menu_typo_transform_mobile":"","ocean_menu_typo_line_height":0,"ocean_menu_typo_line_height_tablet":0,"ocean_menu_typo_line_height_mobile":0,"ocean_menu_typo_line_height_unit":"","ocean_menu_typo_spacing":0,"ocean_menu_typo_spacing_tablet":0,"ocean_menu_typo_spacing_mobile":0,"ocean_menu_typo_spacing_unit":"","ocean_menu_link_color":"","ocean_menu_link_color_hover":"","ocean_menu_link_color_active":"","ocean_menu_link_background":"","ocean_menu_link_hover_background":"","ocean_menu_link_active_background":"","ocean_menu_social_links_bg":"","ocean_menu_social_hover_links_bg":"","ocean_menu_social_links_color":"","ocean_menu_social_hover_links_color":"","ocean_disable_title":"default","ocean_disable_heading":"default","ocean_post_title":"","ocean_post_subheading":"","ocean_post_title_style":"","ocean_post_title_background_color":"","ocean_post_title_background":0,"ocean_post_title_bg_image_position":"","ocean_post_title_bg_image_attachment":"","ocean_post_title_bg_image_repeat":"","ocean_post_title_bg_image_size":"","ocean_post_title_height":0,"ocean_post_title_bg_overlay":0.5,"ocean_post_title_bg_overlay_color":"","ocean_disable_breadcrumbs":"default","ocean_breadcrumbs_color":"","ocean_breadcrumbs_separator_color":"","ocean_breadcrumbs_links_color":"","ocean_breadcrumbs_links_hover_color":"","ocean_display_footer_widgets":"default","ocean_display_footer_bottom":"default","ocean_custom_footer_template":"","ocean_post_oembed":"","ocean_post_self_hosted_media":"","ocean_post_video_embed":"","ocean_link_format":"","ocean_link_format_target":"self","ocean_quote_format":"","ocean_quote_format_link":"post","ocean_gallery_link_images":"on","ocean_gallery_id":[],"footnotes":""},"categories":[41,35,122,63],"tags":[],"class_list":["post-24515","post","type-post","status-publish","format-standard","hentry","category-business-transactional-law-and-practice","category-legal-scholarship","category-public","category-sports-law","entry"],"_links":{"self":[{"href":"https:\/\/law.marquette.edu\/facultyblog\/wp-json\/wp\/v2\/posts\/24515","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/law.marquette.edu\/facultyblog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/law.marquette.edu\/facultyblog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/law.marquette.edu\/facultyblog\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/law.marquette.edu\/facultyblog\/wp-json\/wp\/v2\/comments?post=24515"}],"version-history":[{"count":0,"href":"https:\/\/law.marquette.edu\/facultyblog\/wp-json\/wp\/v2\/posts\/24515\/revisions"}],"wp:attachment":[{"href":"https:\/\/law.marquette.edu\/facultyblog\/wp-json\/wp\/v2\/media?parent=24515"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/law.marquette.edu\/facultyblog\/wp-json\/wp\/v2\/categories?post=24515"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/law.marquette.edu\/facultyblog\/wp-json\/wp\/v2\/tags?post=24515"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}