The grass is not necessarily greener.

For many people, working for a professional sports team would be a dream come true. Polls generally show that around 70 percent of Americans identify as a sports fan (see here, here). Understandably, then, many seek to combine their personal hobbies with their professions.

But there are reasons why employment by a professional sports team may not be the boon that it seems.

Private play

Start with the control structure of professional sports teams in America. (That means teams in the National Football League, Major League Baseball, the National Basketball Association, the National Hockey League, Major League Soccer, the Women’s National Basketball Association, and the National Women’s Soccer League.)

With a few exceptions, the teams are privately held and operated. And as a result, although they are more publicly recognizable than most of the companies whose shares are bought and sold on public stock exchanges, they are far less transparent than most public companies.

Companies whose shares are available for public trading are subject to a vast and detailed array of federal laws and regulations, generally overseen by the U.S. Securities and Exchange Commission. Public companies are required to have a Board of Directors responsible for overseeing the company’s affairs, and some of the Directors must be independent from the organization and its leadership. Public companies also must publicly disclose their financial statements, which requires a rigorous audit process. Finally, public companies are required to create and enforce a strict culture of compliance and ethics. 

Of course, publicly held companies fail to meet these requirements, either procedurally or substantively, from time to time. If the failures are material and discovered (as is occasionally the case), the company and its executives can find themselves in serious legal trouble, either through regulatory action or litigation from shareholders.

Generally speaking, these obligations do not apply to professional sports teams. Teams do typically create audited financial statements each year in order to comply with league accounting rules and because of ongoing borrowing relationships with financial institutions. However, the statements do not include all of the information that a public company is required to disclose. Historically, the information regarding sports teams has been publicly revealed only as a result of an unauthorized leak, as happened to a variety of MLB teams in 2010.

Trouble at the top

Without public disclosures or a robust regulatory scheme, professional sports teams are generally controlled by a single owner – even though there are typically at least 10 minority or non-controlling owners. Indeed, the NFL requires that each team designate an individual to be responsible for the club’s decision-making and operations. As a result, many of the owners of sports teams have practically become publicly synonymous with their teams – such as Jerry Jones and the Dallas Cowboys.

But what if those owners don’t operate their businesses in accordance with best (or even legal) practices? There is no shortage of legal imbroglios and scandals involving professional sports teams. Dan Synder, owner of the Washington Redskins/Football Team/Commanders from 1999 through 2023, was accused of sexual harassment and financial impropriety during his ownership. Zygi Wilf, owner of the Minnesota Vikings and Orlando SC, was found to have engaged in civil fraud and ordered to pay $84.5 million. Jimmy Haslam, owner of the Cleveland Browns and Columbus Crew, narrowly beat criminal fraud charges that cost his company about $177 million in legal settlements and regulatory penalties.

In the NBA, Robert Sarver was forced to sell the Phoenix Suns in 2022 after an investigation concluded that he had created a racially and sexually hostile workplace.  The Dallas Mavericks were accused of a similarly problematic workplace in 2018.  And even farther back, former Los Angeles Clippers owner Donald Sterling was reportedly a notoriously difficult owner and boss before being forced out of the league in 2014 for allegedly making racist comments.

The NWSL also seems unable to put such problems in the past. The current organization, including Commissioner Jessica Berman, resulted from the league’s efforts to move beyond 2021 investigations that indicated that there were abusive and problematic practices at a variety of teams. Despite the league’s commitment to reform, it has continued to face accusations of hostile workplaces, including at the San Diego Wave and Bay FC.

The leagues have taken action in some of these situations, but usually only after public disclosure and outcry. Are there other situations that have not been made public? Glenn Wong, a sports law professor at Arizona State University’s Sandra Day O’Connor College of Law and expert on working in the sports industry, believes that these “problematic workplaces that may have been exacerbated by the private nature of the organizations.”

Anyone interested in working in sports must ask themselves: Is this where I want to work? Are these the kinds of business owners for whom I want to work?

In-house counsel boxed in

The team’s legal counsel can play an important role. Because of the ethical obligation to look out for the best interests of the company, a team’s in-house attorney will generally be on guard for problematic practices and seek to correct them. But even here, there are important differences. 

If an in-house attorney believes someone at the company is engaged in legally problematic conduct, the attorney is obligated to take the issue all the way up the organization, to the highest authority if necessary. If the organization’s highest authority fails to take appropriate action, the attorney may report the conduct to others as necessary to protect the organization’s interests. 

In a public company, this would normally entail going to the Board of Directors.  But in a private, closely held sports team, the owner may answer to no one. And if the owner is the person who allegedly engaged in the wrongdoing, the attorney is placed in a no-win position and may want to start packing. 

Even if the attorney is fired for complying with ethical obligations, in most circumstances the attorney must keep the reasons for the termination confidential.

Punching the clock

Finally, consider the more mundane aspects of employment – pay and hours.  According to Professor Wong, “positions in professional sports organizations are highly competitive, both in terms of the number of applications and the quality of the applicants.” As a result, “the pay is lower in the professional team sports industry compared to the non-sports industries,” often “10 to 25 percent less.” Professor Wong also explained that “the number of hours worked in the sports industry are longer,” and often includes attending the games and working on evenings, weekends, and holidays.

New rules, new owners, new practices?

Recent changes in league operations may address some of the concerns discussed above. Sportico estimates that the average NFL team is worth $5.93 billion while the average MLS team is worth $678 million. The average values for NBA, MLB, and NHL clubs lie somewhere in between. At these valuations, it has become too difficult to find anyone with sufficient capital to buy and operate a team. 

In recent years, all of the major American professional sports leagues have amended their ownership rules to permit investment by private equity firms. The rules governing these investments are strict: among other things, they require long-term investment, limit the number of teams in which firms can invest, and limit the control that can be exercised by the firms.

The rules are primarily meant to address any concerns arising out of the typical private equity investment model in which firms often take control of a business, reduce headcount to lower costs, or return the business to profitability and resell it for a profit. Such a model is not necessarily compatible with trying to win on the field, court, or ice.

Although the firms investing in sports are constrained in many ways, their rigorous approach may help improve the workplaces for some of the teams in which they invest. Private equity firms are notorious for scrutinizing the operations of organizations in which they invest, looking for inefficiencies, risks, and opportunities. These firms generally expect full transparency on company financials and healthy decision-making practices based on principles of sound management.

It seems that at least some professional sports teams are not operating up to the standards that private equity firms expect or traditionally impose on their portfolio companies. If the firms hold their sports team properties to the same standards, there may be at least some positive change.