LAST WEEK's demise of the Houston Comets underscores the risks of the WNBA's six-year-old shift toward owners not affiliated with an NBA franchise. The Comets were one of seven independently owned teams, part of a trend meant to inject fresh money and enthusiasm. But the WNBA remains a tough business. While 10 of 14 teams were even or saw an increase in revenue from 2007 to '08, only a few have turned a profit. The problem? "There are the normal issues that face any small business," says Kathy Goodman, co-owner of the L.A. Sparks. "Then there is the fact that people haven't run professional women's sports franchises."
Comets owner Hilton Koch, a furniture magnate, bought the team for $10 million in 2007 and says it was a struggle from the start, when he took over just before training camp with no business staff in place. "Timing played a big role," he says. Last season, en route to missing the playoffs for the fourth time in five years, the Comets averaged 6,648 fans (barely half what they drew while winning titles in the late 1990s). Koch says that "to cash-flow the team" in '09 he needed to sell 3,000 season tickets and get $2 million in corporate sponsorships, but the Comets reached only about two thirds of each benchmark. The league took control of the foundering franchise in August, then couldn't secure a buyer.
League officials dismiss the Comets' fold as an isolated example of ill-equipped ownership. Goodman says the Sparks are close to profitability (attendance is up 14.4% since '06) and the Seattle Storm is about to sign a 10-year lease with KeyArena.
The WNBA saw rises in national TV ratings (19%), attendance (2.2%) and merchandise sales (36%), but it still must keep costs in check with a salary cap of $772,000 per team. WNBA president Donna Orender calls the model WNBA owner someone who's looking for a "return not only financially but also emotionally and psychically on their investment." In other words, at least for now, most owners will be losing money.
December 15, 2008
Comets' average attendance in 2008, half the 1998 average
Price the WNBA sought for the team