It has been a nervous year for Portland’s basketball fans, but recent reports that the Trail Blazers will be acquired by consortium intent on keeping the team in the Rose City is welcome news. Paul Allen acquired the Blazers for just $70m in 1988, and today’s rumored price tag of $4.25bn underscores the long-term trend of increased valuations for professional sports teams. Whether one looks at the Boston Celtics selling this summer for $6.1bn (having last traded hands in 2002 for $360m) or the Washington Commanders acquisition in 2023 for $6.05bn (having been bought in 1999 for a then record sum of $800m) – being a billionaire sports team owner sure seems like a good thing.
After my initial relief of not having to worry about seeing Damian Lillard return to the court wearing the letter O on a Seattle Blazers jersey, the news reminded me of two of my favorite investing quotes, each highlighting an important investing tenet.
Warren Buffet has said that “The first rule of investing is never lose money. And the second rule of investing is, never forget rule number one”. Making money is much easier when you have money. Whether as a real estate developer, investor or sports team owner, starting with money allows one to make more money. Preserving wealth and not impairing that foundation is crucial.
There is, of course, a tension between not ever losing money and taking on calculated risk to earn higher returns than just having your money in the bank, or under the mattress. The famous investor Peter Lynch, Fidelity portfolio manager and author of the 1989 book “One Up on Wall Street”, has said that “more money has been lost by investors anticipating a 10% correction, than in any 10% correction itself”. The quote highlights the peril of being too risk adverse and trying to be too cute in timing the market. If one becomes overly concerned about the anticipation of short-term losses due to market gyrations, you can lose the most time-tested way to grow wealth; investing over the long-term and enjoying the compounding effect of positive returns. While it might be more fun owning an NBA team than an equity portfolio, the S&P 500 has itself delivered a remarkable seven-fold return over the last 23 years. A result only achievable for those that bought and held for the long-term.