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Despite claims that virtually all the teams lose money, why does it make economic sense, at...

Despite claims that virtually all the teams lose money, why does it make economic sense, at least to some, to spend $1 billion on a sports franchise?

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Answer #1
  • People are crazy for sports and hence tend to buy such teams that are supposed to incur losses in future.
  • These businessman suffer losses but since there are large number of such people who are crazy for sport always bid for buying team.
  • Hence, there remains ample space to sell loss making team and earn some capital gain. Thus, loss suffered is recovered through the capital gain in near future.
  • Further, buying team brings about the stardom, name and fame for owner of team.
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