British Basketball League Wants Your Dollars
By: Mark Koba | Senior Editor, CNBC
Basketball in Great Britain is apparently growing leaps and bounds and a group called the British Basketball Association is putting on a full court press to entice investors for a new pro league they hope to establish in the U.K. next year.
And they're seeking American dollars. With names like former NBA player and British born John Amaechi and former NFL wide receiver Lynn Swann on its management team, the BBL has stretched out the welcome mat in the U.S. by opening up an office in Lower Manhattan.
For $5 million, an investor or group of investors can get a 40 percent stake in one of the initial eight franchises in U.K cities like London, Liverpool, Glasgow, Leeds and Belfast. Venues for the games with at least a 5,000 seat capacity would be rented in those cities.
The BBA business model is a single entity, meaning that unlike the National Basketball Association or National Football League, investors or team owners would be subject to strict top-down controls by the league when it comes to major decisions on finances, players, contracts, merchandising and sales of teams.
The aim is to eventually become more like the NBA in terms of business structure, but the idea now is to get the league going and aim for more owner freedom down the road, said Ron Scott, BBA founder, chief executive and commissioner.
"We think this idea is a fantastic marketing opportunity and we need the stability that the this type of model give us," Scott said.
"With strict financial controls in place, especially in the early days, we can avoid the failure of other start up leagues," said the 48-year-old Scott, who is a native of Chicago and a former corporate financial adviser on Wall Street.
"An investor would have power without control," said Scott. "You can bring in a player or coach, but the league would have say over it. For instance, say he wants to bring in college players. That wouldn't be good and we wouldn't want that."
Scott said he's talked to NBA commissioner David Stern about the league and gotten an enthusiastic high-five from Stern, but there's no financial involvement from the NBA in the BBA.
The BBA hopes to be profitable in four years and grow to 12 teams in year five, said Scott. Until then, investor losses would be covered up to 60 percent by the BBA.
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Helping to keep costs down is a total team player salary cap of $1.2 million — with the one designated player exception who could be paid the highest salary possible, but by the investor.
"There's no shortage of players in the U.K and Europe for us to draw from," Scott explained. "We might get some Americans to play but we're focused more on the player from England."
At least one analyst said the BBA is headed in the right direction.
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"This is a good way to go for a start up league," said Robert Boland, academic chair of the Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management at the New York University,
"The greatest danger to a start-up league is that one or two owners would have the resources to get better players, and that could just blow the other teams up financially as they tried to keep pace," Boland explained.
"With this set up, the BBA has a way of maintaining costs so that the league can be stable in the beginning and try to reach profitability," said Boland. "It makes sense to operate this way."
Any investor needs to make sure they do their due diligence, said Mark Conrad, professor of sports law at Fordham University.
"There's always risks in start-up sports leagues so just make sure you ask all the right questions and look into the things like British bankruptcy laws," Conrad said. "When it comes to anything international, you have to know who's in control, whether it's a sports federation or the league."
The BBA will have a fight on its hands to keep fan interest, said Boland.
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"We have four major sports in the U.S., but in England the sports pages are full of tennis, rugby, cricket, soccer and many others so it will be difficult to compete for a fan base," Boland said.
"You'll know you have loyal fans that come back when they remember how they feel about a loss or a win, not whether the beer they drank was good," argued Boland. "It takes time and that's why it's a tough fight to establish a new sports league."
Great Britain has an established pro basketball league, the aptly named British Basketball League started in 1987, which has franchises in most major English cities. The games draw crowds of just around 1,000 per contest and so it might seem like a stretch to try a new pro league, while Italy, Spain and Germany have more secure and established leagues that often draw high profile U.S. players.
But basketball is currently the second highest participation sport behind football (soccer to Americans) and the fourth highest participation sport across the ages of 11 to 16 years old in the U.K. That's enough for the BBA to build on, Scott said.
"Basketball is popular in Europe and getting more popular in Great Britain," said Scott. "Our goal is to make Great Britain the center of European basketball in the next five to ten years."
