The Buss family acquired the Los Angeles Lakers and their shared arena for $68 million in 1979.

In June, the Busses handed the reins to Mark Walter, the CEO of the Guggenheim Partners investment firm and owner of the Los Angeles Dodgers.

Walter paid $10 billion and now has majority control of the Lakers.

If you follow sports, you know the Lakers franchise has been wildly successful. It has won nine NBA championships over the past four decades. And the Buss family has made a killing off their initial investment.

They could have done even better, though…

Had the Busses parked that $68 million into the S&P 500 Index 46 years ago, they could be sitting on roughly $13 billion.

Of course, for most people, the idea of buying stocks is nowhere near as fun as scooping up a professional sports team (or two). And $10 billion is still an impressive return.

But most people can’t afford to bankroll an NBA team. Fortunately for the average investor, a simple strategy has quietly outpaced one of the flashiest deals in sports history and set the stage for long-term wealth.

Back in March, Wyc Grousbeck sold the Boston Celtics for $6.1 billion. In 2023, the Dallas Mavericks sold for $3.5 billion. The Phoenix Suns, along with the Phoenix Mercury WNBA team, went for $4 billion that same year.

And then there’s the NBA’s $77 billion media agreement with ESPN, Amazon, and NBC in 2024. It’s just the latest deal in this booming investment space.

However, sports teams are still high-risk, labor-intensive businesses…

Owners need to manage everything from massive payrolls and TV contracts to athlete injuries and trades.

Even the elite Lakers brand has endured poor performance and revenue dips on occasion.

Meanwhile, the public market has quietly delivered enormous returns. The S&P 500 has compounded at an annual rate of about 11.5% since 1979.

That may sound modest compared with flashy sports deals. But don’t underestimate the power of compounding.

As we said, if the Buss family invested in the S&P 500, it could have generated $3 billion more than the Lakers sale, all without the headaches of running a professional sports team.

And stocks offer another key advantage: Liquidity.

Unlike sports franchises, investors can buy and sell an S&P 500 fund – like the SPDR S&P 500 Fund (SPY) – with few obstacles and full transparency.

No matter how you slice it, the Buss family struck gold. Its $68 million Lakers investment turned into a multibillion-dollar empire and a legendary sports dynasty.

But even that remarkable outcome couldn’t match the consistent churn of the S&P 500. And the best part is, anyone can invest in the public market.

To be a successful investor, you don’t need to start with millions of dollars. You don’t need to buy anything fancy or “exciting.”

The market rewards patience and discipline. And in the long run, the quiet compounders will often win out over flashier bets.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research

Today’s analysis highlights the same insights we share with our FA Alpha Members. If you want to an get in-depth analysis of market trends and uncover undervalued stocks, become an FA Alpha Member today.
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