Lessons from Family Sports Teams Failures

Many of us have heard that the owner of a major sports franchise could lose his $1.7 billion empire in a family feud. He reportedly pushed aside a daughter and grandchildren in favor of his third wife.

This is not the story of Donald Sterling, the former owner of the NBA’s LA Clippers.  It is fresh news this week that Tom Benson, owner of the NFL’s New Orleans Saints and his family are in a similar conundrum.  This is no recent phenomenon as there have been multiple family sports team dynasties that lost more to poor planning and family feuds. 

The point in recounting these sad stories is not to suggest we should avoid family ownership of businesses, but to plan for the day when the owner is no longer around. 

• Many businesses fail because of poor planning.  Divorce, competency disputes and family infighting cause distractions that spill over into ownership of the business. Inadequate estate planning can generate liquidity issues that force unwanted sales of business assets to settle the estate.
• With adequate planning, family-owned businesses can thrive.  For example, the Pittsburgh Steelers have remained within the Rooney family since the team’s founding by Art Rooney in 1933.
• Bad things can happen no matter how much planning is done. Family members can lose competency and make disastrous decisions. Couples can let their personal animosities unwind the family fortune. The trick is not to change the nature of families but rather to contain the damage

See Steve Parrish, Another Family Sports Team Failure, Another Lesson Learned, Forbes, Feb. 16, 2015.