Sports Biz with Darren Rovell

Foreign Ownership Of U.S. Sports Teams--I'm Predicting More

Sheik Mohammed bin Rashid Al Maktoum

I’ll never forget how many e-mails I received when I wrote that Mohammed bin Rashid al Maktoum, the ruler of Dubai, should be considered to be in the mix as the next owner of the Chicago Cubs. That was more than a year ago.

At the time, I had no specific information on the Sheikh and I still don’t.

But with the rise of Sovereign Wealth Funds, country owned funds that have absurd amounts of money invested, and the relative declining value of the dollar compared to the rest of the world’s currency, I’m predicting that there will be at least five non-U.S. citizens owning teams in the NBA, NFL, Major League Baseball or the NHL in the next decade.

Add to the fact the drying up of the financial markets--which means you need more cash upfront to pay for a team and this thing seems like a slam dunk.

Off the top of my head, I can only think of Nintendo (Seattle Mariners) as a foreign owner of a team (both the Raptors and the Maple Leafs are owned by Canadians), but–-trust me--there’s more where that came from.

An NBA team might be owned by Guo Guangchang, one of China’s richest people. An NHL team might be purchased by Oleg Deripaska, the richest man in Russia, whose net worth was last tabbed at $28.6 billion.

Just look at this week’s Premier League Championship between Manchester United and Chelsea. ManU is owned by an American, Malcolm Glazer and Chelsea is owned by a Russian Roman Abramovich.

It’s a pretty simple premise. Warren Buffett is only interested in his minor league Omaha Royals and Bill Gates has passed as well, but there are plenty more out there who love sports and whose fortunes are growing.

There are not a lot of teams for sale at any given time, but the truth is that, for the right price, most teams are for sale. Check out what Dallas Mavericks owner and soon-to-be Chicago Cubs bidder said in his blog a couple weeks ago about future foreign ownership of U.S. sports teams.

“It's going to happen,” Cuban wrote. “The money will be too big for a current owner to say no to. The potential thrill of a free spending owner will be too much for the fan base to say no to, particularly in baseball.”

So here’s the deal from the insiders I’ve talked to. All these leagues obviously have the right to reject any candidate they want, but there’s a number where it could be hard to consider anything but selling the team to a foreign owner, who might offer to pay a $150 million premium on top of the next highest bidder.

The great concern is the owner doesn’t just operate the team from thousands of miles away, but that’s not going to be an issue. Most of these people run big businesses and they are very aware of knowing what it takes to win the game. They also have people who have set management structures for their many businesses. So the main owner might be at only 10 NBA games a year, but his managing partner will be at every one.

Now there is one major concern that will likely slow down the amount of foreigners coming into the game. In the Premier League, there’s virtually no league background check. Come in with the most money and it’s yours.

That’s not the case with the U.S. sports leagues, who give owners a “financial proctological exam,” as one insider put it. The NFL will be the hardest because the league doesn’t allow corporations to own teams, meaning that foreigners will have to present their personal tax returns. But even after all this, the financials are just too good and a lot of these people don't mind putting their money into something that doesn't necessarily generate immediate cash flow.

Fans will initially revolt at the idea of a foreign owner, but like all fans, if this owner spends a ton of money and the team wins, it will soon become a non-issue.

Questions?  Comments?

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