BOARDROOM SPORTS: Foreign funds could back teams

Dean Bonham & Don Hinchey

Published July 18, 2008 at 9:05 p.m.

Text size  

• 0 Comments
• Email
• Print

In the July issue of ColoradoBiz magazine, economist Tucker Hart Adams commented on the impact of recycled petrodollars- the money that OPEC countries return to the U.S. as a result of their oil sales to this country. Adams' comments, and the recent acquisition of Anheuser-Busch (a sports advertising behemoth) by InBev, got us thinking about the potential for foreign ownership of North America's professional sports franchises. Could oil money lubricate future acquisitions of our favorite teams?

Though there has already been some non-North American ownership of our sports teams, notably of the Seattle Mariners and Red Bull New York, it's surprising we haven't seen more overseas money in play here. On the contrary, in the past few years we've actually witnessed an outflow of funds, primarily from the U.S. to Europe, for foreign sports properties.

Prominent examples include Phil Anschutz's ownership (through Anschutz Entertainment Group) of professional sports teams in Germany and Sweden; Tampa Bay Buccaneers owner Malcolm Glazer's acquisition of Manchester United, the pre-eminent team in the English Premier League; Cleveland Browns owner Randy Lerner's purchase of Aston Villa, also of the Premier League; George Gillett and Tom Hicks' purchase of the EPL's Liverpool franchise; and Stan Kroenke's part ownership of Arsenal.

Given the EPL's experience, one might wonder why the reverse isn't happening. All the major leagues in this country are actively "internationalizing" their sports via the acquisition of foreign players, through games played in foreign lands, by opening offices or leagues in other countries and by hosting international matches. Further, deep-pocketed owners, regardless of nationality, should improve the competitive potential of teams whose bottom lines are perpetually at risk.

So why haven't we seen more foreign money here? There are several reasons.

* Cost: In the past, the value of our professional teams compared to that of teams in foreign countries has been unattractive to foreign investors. This could be changing, as the weakness of the American dollar compared to foreign currencies improves their relative value considerably. Further, as the "home" teams' values accelerate, many prospective North American buyers could be priced out of the market.

* League resistance: The conventional wisdom has long been that local owners would be better able to harness hometown resources to help the team be financially sound and muster fan support. This hasn't always proven to be the case, however, and in any event foreign ownership with locally connected lieutenants could accomplish the same objective.

Perhaps more pertinent is that professional sports leagues are essentially clubs, and like any club they can be pretty persnickety about whom they admit. Are prospective buyers competitors of existing owners? Are they too outspoken or contentious for the club's liking? Do they threaten the league's status quo through the potential exercise of their personal business? All these could be disqualifiers.

* Background checks: Years ago, a couple of hundred million dollars could result in a no-questions-asked reception in sports circles. That's no longer the case. A concern for the image and overall health of a team or league has led to more stringent scrutiny of prospective buyers. Since wealthy individuals are understandably reluctant to divulge details of their financial empires, this could pose some problems. But with each increase in the price of a barrel of oil, and a corresponding increase in the price of other commodities, the pool of overseas prospects seems to be expanding, and that improves the odds of qualified candidates.

The Bonham Line: Professional sports have become a global marketplace. Very soon, ownership of professional sports teams - in North America and elsewhere - will not be based on ethnic or geographical considerations. It will be predicated on the financial strength of the owners, their individual integrity, their ability to mobilize regional resources and their commitment to operational excellence. Fans may initially resist the development but could ultimately benefit from it.

Dean Bonham is CEO and Don Hinchey is vice president of communications for The Bonham Group, a Denver-based sports and entertainment marketing firm. Send your comments to dhinchey@bonham.com.

Featured

• 2008 Voter’s Guide

  

  Use our Ballot Builder tool to compare your viewpoints to the candidates.

• A Dozen on Denver

  

  Sandra Dallas wrote 'Lennie's tavern' for our ongoing fiction series. Check it out!

• Rocky Multimedia

  

  The news comes alive in our videos and slide shows. Catch up on today's events.

• Bronco Dean's rant

  

  Listen to Bronco Dean's totally biased pregame rant about the Broncos-Jaguars game.

• Presidential Elections

  

  See how Colorado counties have voted through the years.

• County election profiles

  

  A look at how residents in each Colorado county may vote.

• A dream fulfilled

  

  A Rocky Mountain News and MediaStorm production

• Latest from Dove Valley

  

  Click for more broncos videos.

• Sam Adams' Open Mic

  

  No. 44 means a lot to Floyd Little