The Cleveland Cavaliers have reached a deal to sell a minority stake in the team to an investor from China. Cavaliers vice chairman David Katzman — whose Camelot Ventures group owns 15 percent — told CNBC that this deal is expected to be approved by the end of the year by the NBA’s board of governors.
Katzman would not say how much the lead investor, Chinese businessman and philanthropist Albert Hung, paid for the deal, but Forbes recently valued the whole team at $476 million. Katzman did say, however, that the deal was a cash deal and therefore did not involve any financing.
If the deal goes through, it will be the first big investment by the Chinese in a major American sports franchise.
“This is a great milestone for ownership in general,” said Katzman, who along with three other partners helped buy the Cavaliers with Dan Gilbert for $375 million in 2005.
When news first broke in May of a Chinese investor possibly buying a piece of the team, some said the deal would be key to keeping Cavaliers guard LeBron James in Cleveland. The thinking was that if there were Chinese interests involved, James could be an even bigger star in China than he is now, and could score additional endorsements from China-based companies.
Katzman said the team doubled revenues since 2005 and the new partner is expected to help make the Cavaliers even more money. Katzman said that Hung has many connections in China and sponsorships of the team by Chinese companies are expected to rise.
"The process is ongoing," NBA spokesman Brian McIntyre said of the deal. "We expect it to be presented to and voted upon by the Board of Governors in the next month or so."
Hung’s stake will represent the second largest stake in the franchise. Hung is the chairman of GoldPoly, a provider of solar energy equipment.
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