Steven Cohen and I have two things in common. We both come from New York and we both owned things.
The difference is he STILL owns things. Like the New York Mets.
I come from the radio industry where we bought stations at a ‘stick value’. This was determined on what your trailing 12 month positive cash flow was, times the number determined by the economical data at that time of sale. I made all my purchases and sales in the 1980’s and that number had a high of 10 when I sold a station in 1984, and a low of 3 when I sold my last station in 1989.
Example: $400k positive cash flow times 10 = $4mil sale.
Sure, some people tried to market stations that weren’t making a buck, but that’s like having sex with only one person in the room. Zero times any number still comes out a blank.
We didn’t buy these radio stations so we can play an Eagles song and make people sing. We bought them so we could come up with a way to raise our audience levels in the survey companies and then, in turn, raise our revenue base with no additional operating cost. Increase this to a level where you produce a 12 month trailing positive cash flow of $400K and that translates to a $4mil sale.
In Savannah, Georgia, we had less than a one share of audience when we bought it in 1984 for $1mil. I gave away a Rolls Royce during ratings time and our ratings shot up to around a six share. Our commercial rates went up along with increased buyer desire. In 1989, we obtained a $400K profit and sold it for $4mil.
See how this works?
See, business people buy things so they can someday sell them.
Hedge fund managers are no different, expect for the fact that their turnover rate could be hourly. They basically would never be considered a success at their job if they kept things for, let’s say, the length of the new Lindor contract. It just doesn’t happen.
Values for all sports franchises have recently been updates by Forbes. They have the Mets valued at $2.45bil, $500mil more than the price Cohen paid for the team, like, last week.
The Mets just pulled off their big splash. Not a Rolls giveaway, but a Lindor signing.
More games will be won. Playoff games will be played. Revenues will go up, the team value will increase.
Someday, far before the Lindor deal expires, this team will be worth $3.45bil, a billion more than paid for,
See how this works?
3 comments:
Nice article, Mack; good to see you back writing an opinion piece, keep it up! One other difference between the business that Steve Cohen's invested in vs what you or I or others might: yes, we're all in it to make money, but it must be a lot more fun owning a team of which you're emotionally invested as a fan, rather than just a business. good to be involved with such a passion!
Exactly right, Mack, and that was such a huge factor in the Lindor signing amount. It is not just WAR, it's the total package. And Lindor? The total package is Rolls Royce.
As long as he gets on a superstar roll, playing wise and validates the burnished image.
I looked at McCutcheon last night - former MVP, and still good, but not the MVP version - and I just hope Lindor stays at a very high level for many years to come. Success breeds success.
He had an excellent night last night. A hit, a liner to third, a hot shot grounder that the pitcher miraculously snagged, and a walk where he hit several loud foul balls.
This team needs to HIT to win. If it is going to put a baby bib on deGrom, we will just have to outscore opponents.
Hey Jon.
Hopefully, you are right here.
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