American Sports May Soon Face a Foreign Invasion
The owner of the Dallas Mavericks, Mark Cuban, had an interesting observation last Friday when he asked on his Web log: When will foreign ownership of American sports teams start? Actually, foreign ownership in American sports started in 1992, when Seattle Mariners owner Jeff Smulyan sold the baseball team to a group of Seattle-area businessmen, led by Nintendo chairman Hiroshi Yamauchi, in the middle of the 1992 season. Yamauchi put up 60% of the $125 million purchase price, but major league owners put a number of restrictions on the deal that effectively kept Yamauchi away from the day-to-day operation of the team. Also in 1992, Phil Esposito put an NHL expansion team in Tampa on ice with the backing of a consortium of Japanese businesses led by Kokusai Green, a Japanese golf course and resort operator, until Art Williams bought the franchise in 1998.
Cuban has also overlooked that one team in his league, the Toronto Raptors franchise, is owned by Maple Leaf Sports and Entertainment, which also owns the Toronto Maple Leafs, among other holdings. The Toronto Blue Jays franchise is owned by Ted Rogers of Rogers Television. Maple Leaf Sports and Entertainment and Rogers will be partners with Buffalo Bills owner Ralph Wilson in presenting Bills "home" games in Toronto.
But Cuban does have a point when he wrote on his blog, "For a while there, it looked like North American sports teams owners were going to take over European Soccer. The biggest Premier League names were getting bought up. Then a funny thing happened. The US Dollar turned upside down against major currencies making deals that once looked tenable, all of the sudden seem very, very expensive.
"But as is the nature of currency exchange, for every Yin, there is a Yang, or in this case an Abramovich or any number of wealthy Europeans or Russians who are coming to the US in search of bargains." (Abramovich is Roman Abramovich, the Russian billionaire oilman, who is the owner of Chelsea Football Club of the English Premiership.)
The English pound is worth approximately twice the amount of the American dollar, while a euro can be purchased for about $1.52 in American money. That means American sports teams, if available, would be sold at bargain prices to foreigners.
"With the price of NFL franchises now past a billion dollars with half the Dolphins apparently selling for more than 550 [million dollars], how many individuals in this country that don't already own a franchise actually afford to buy an NFL team?" Cuban opined. "It is just a matter of time, and maybe not much of it, before we start to see our sports teams gobbled up."
Cuban theorizes on his Web site that the NHL and NBA would have no problems in accepting "foreign ownership" because of the "international flavor" of those leagues. But will MLB accept "foreign" ownership? That is a significant question. MLB had no problems when Australian ex-patriot Rupert Murdoch bought the Los Angeles Dodgers for $311 million in March 1998. Murdoch was a part of MLB's inner circle before buying the Dodgers, as his Fox network gained American television rights in November 1995.
Back in 1992, then-commissioner of MLB, Fay Vincent, had a major problem with the sale of the Mariners to a Japanese majority partner. MLB owners initially opposed the Japanese involvement because they had a policy against foreign ownership, and that started a battle between Vincent, the MLB owners, and Senator Slate Gorton of Washington. On July 1, 1992, the Baseball Club of Seattle assumed control of the Mariners. The Board of Directors included John Ellis as chairman and Minoru Arakawa (Yamauchi's son-in-law). MLB, as a condition of the sale, required that the Mariners' team president and chairmanship had to be filled by American partners.
On the other hand, American sports owners have been investing in European sports for more than a decade. Los Angeles Kings owner Phil Anschutz (who signed David Beckham to a deal with his Los Angeles Galaxy of the MLS) owns the 02 Arena in London, two hockey teams in Germany in Hamburg and Berlin, and a soccer team in Hammarby, Sweden. The owner of the Colorado Avalanche, Colorado Rapids, and Denver Nuggets, Stan Kroenke, is a "substantial" investor in the English football club Arsenal FC. The owner of the Texas Rangers and Dallas Stars, Thomas Hicks, is partners with Montreal Canadiens owner George Gillett as the moneymen behind Liverpool FC. On Tuesday, Hicks and Gillett turned down an offer from Dubai International Capital to buy the Premiership club for $800 million.
North American team sports are a closed shop for foreigners right now. The horse racing industry is filled with foreign owners, though. The Dubai wealthy have attracted Tiger Woods to play in that country, and there are golf and tennis tournaments along with track and field and other Olympic sports played globally. But the North American market still just has one foreign owner: Yamauchi.
Cuban wrote on his Web blog, "I bring this up not only because its an interesting question about the impact of globalization in business, but because it could raise some fascinating cultural questions as well. It's going to happen. The money will be too big for a current owner to say no to."
Cuban is correct: An Abramovich type will surface sometime soon and try to buy an American franchise, and it probably will not be too much of a concern to sports consumers, if the Seattle Mariners franchise sale is any indication. The globalization of American sports will continue with foreign ownership in the next frontier.
evanjweiner@yahoo.com
