Will Chinese investors sway LeBron?
Selling stake to China-based investors helps Cavs' case, but winning still the key
The question is being asked in front offices all over the NBA map: How much can the freshly humbled Cleveland Cavaliers realistically increase their odds of keeping LeBron James by selling a 15 percent stake of the club to China-based investors?
Some rival executives are applauding the Cavaliers -- desperate as they are to re-sign their homegrown face of the franchise either this summer or the following summer -- for their ingenuity and ambition. Seeking new investors who theoretically could help James increase his marketability in Asia is bold and shrewd.
Others, though, have expressed doubt that the proposed deal will make a real difference if the 24-year-old superstar, who already has a sizable profile in China, responds to Cleveland's failure to get past Orlando in the Eastern Conference finals by concluding that he has a better shot at winning multiple championships elsewhere.
The only certainty, at this early stage, is that the NBA -- which at the end of the regular season had 77 international players from 33 countries and territories -- is inching closer to the next phase of the globalization game. The breakthrough this time would come in the form of the foreign ownership that is commonplace in Premier League soccer in England.
Commissioner David Stern isn't making firm predictions about how long it will be before the majority share of an NBA team is controlled by an entity outside North America. Yet that's a scenario he certainly envisions, judging by the admiration in his voice as he cited the numerous Premiership clubs purchased by foreigners in recent years.
In a telephone interview with ESPN.com, Stern referred to the Cavaliers' proposed sale of a minority stake to Chinese investors as a "modest step" into the world of international investment and a "logical second step" to the NBA's growing list of projects in China, which include commitments to build several new arenas and develop a league there.
Yet it also was Stern who steered the conversation to the influx of foreign owners in the Premier League, which has drastically changed the landscape in world soccer. It was Stern who volunteered that two of England's most storied clubs (Manchester United and Liverpool) and a third from the top division (Aston Villa) are now owned by Americans and that the ownership reign of Russian tycoon Roman Abramovich has transformed the global stature of London-based Chelsea. Stern likewise noted that two Premiership clubs -- Manchester City and Portsmouth -- have been purchased in the past year by parties from Abu Dhabi in the United Arab Emirates.
Asked whether he would welcome similar arrangements in the NBA in the near future, Stern said he can "see that [happening] in the world of globalization."
But only, Stern added, if "they abide by our rules."
That was a reference, in part, to the stringent background checks any foreign investors would be subjected to by the NBA. That includes the group seeking to buy into the Cavaliers, which is fronted by JianHua (Kenny) Huang of Sportscorp China -- whose U.S. wing with Chicago-based sports consultant Marc Ganis has sealed marketing deals with the Houston Rockets and New York Yankees -- and Adrian Cheng from the influential family in charge of the Hong Kong conglomerate New World Development.
Soccer authorities in England have been routinely criticized for a lack of depth in their background checks. The NBA's examination of all facets of the Cavs' deal could delay the league's vote on the matter until the next Board of Governors meeting in late October, although Stern said the vote can be conducted by e-mail if the review is completed sooner.
If the purchase of the minority stake is approved, as expected, there is little doubt the straight-line connection to China will only help grow the LeBron brand in a marketplace countless American sports entities are trying to tap into. That would feed into James' well-chronicled desire to be a "global icon" -- without his having to leave his hometown team for a more glamorous franchise like the New York Knicks.
James recently told reporters that the prospect of playing for a team with a direct Chinese link "should be fun." The Cavaliers themselves have otherwise declined to speak publicly about the potential investment, but it is quite reasonable to project that an alliance with such deep-pocketed partners overseas would not only enhance majority owner Dan Gilbert's ongoing spare-no-expense approach to roster building -- with a payroll well into luxury-tax territory -- but also create the potential for new Chinese sponsorship revenue, stabilize recent turbulence among Gilbert's limited partners and, most crucially, improve the global image of the franchise. The negative stigma Cleveland sports teams have dealt with for decades could be neutralized somewhat if the Cavaliers' popularity in China grows tangibly as a result of this partnership.
"I wouldn't expect that the Cavaliers, simply because of a Chinese ownership interest, will get the attention that the Rockets have gotten in China," said Ganis, who founded Sportscorp with Huang seven years ago to pursue sports and sponsorship deals involving U.S. and Chinese interests. "Yao Ming is arguably the most famous living person in the most populace nation in the world. That's not going to get trumped any time soon.
"But the combination of one of the great stars in the NBA [James] with an excellent management [Cavs] that has outperformed their market dramatically [in terms of revenue] with not just a Chinese investor but a Chinese investor of this magnitude will quickly catapult the Cavaliers to the highest echelon of interest in China."
"One plus one plus one in this case," Ganis said, "equals a lot more than three."
Said one front-office rival from a playoff team: "I think it's an aggressive chess move by the Cavs that, if nothing else, shows LeBron that they are willing to get creative. It's a win for the city from a perception standpoint. For years and years and years, small-market teams have expected the worst. They [presume] that unless we get really lucky, our star player is going to L.A. or New York or Chicago. Maybe this flips it.
"The Cavs were lucky enough to draft an asset like LeBron. And now they're saying, 'If the kid doesn't play in a world market, let's bring a world market to the kid. Let's bring a world market into our own backyard.'"
That sort of optimism from an executive in another city undoubtedly will hearten Cavs fans after 66 regular-season wins and an MVP-winning season from James weren't enough to get Cleveland back to the NBA Finals for the second time in his career. The whole city is badly in need of a lift after the Cavs -- mere days after word of the potential China deal spread -- were ousted one round short of a LeBron-versus-Kobe Bryant showdown for the title. Cleveland was overwhelmingly favored to get there after sweeping through the first two rounds of the playoffs, especially after Boston lost Kevin Garnett to a season-ending knee injury, and with the Cavs' eventual conquerors from Orlando playing without All-Star point guard Jameer Nelson, thanks to a separated shoulder, and needing seven games to take out the injury-ravaged Celtics.
Yet for every around-the-league admirer of what Cleveland is attempting to do with its prospective new partners, there are skeptics who caution that it's easy to overstate how much a minority ownership group from China can really sway James, either this summer when the Cavaliers offer him a contract extension on the first allowed date (July 18) or in the summer of 2010 when he's eligible to become an unrestricted free agent.
One of the league's top power brokers pointed out that "access to China isn't limited to one person or company" and that James already has Nike pushing him hard in Asia. Another rival executive, while saying he sees "more positives than negatives" to the idea, wondered whether the full scope of possibilities from the proposed alliance with the group led by Huang and Cheng will be known by the time James is projected to hit the open market on July 1, 2010. Yet another asserted that James has to win a ring in the near future or at least land a prominent Chinese teammate if he "wants to really conquer China." There also are likely to be teams this summer that will protest Cleveland's making this move on the basis that Chinese marketing opportunities that arise for James in the wake of this alliance will represent money earned via salary-cap circumvention.
Board of Governors approval of the Chinese investment is nonetheless expected by next season, given the league's considerable interest in growing its presence in Asia and Huang's history of deal-making with the Rockets and other domestic sports entities such as USA Basketball. Yankees president Randy Levine recently told The New York Times that Huang -- who has studied at Columbia, St. John's and New York University -- has served as "a trusted adviser to the Yankees and helped us establish our operations in China and in other parts of Asia.'"
Yet even that much is not guaranteed. A potential snag sure to be examined by league officials came to light late last week, when a South Florida law firm revealed that Huang was sued in March by an automobile import/export business that alleges Huang "fraudulently embezzled $2.9 million" from AutoChina Limited.
So it seems safe to suggest that the two factors most likely to convince James to commit his long-term future to the Cavs remain unchanged, no matter what happens with Gilbert's planned 15 percent sale to Huang and Cheng's group.
James, for starters, is a proud Ohioan who always has given a strong impression that it would mean a great deal to his legacy to be the guy who grows up in nearby Akron and then finds a way to break through the supposed curse that has plagued Clevelanders for more than four decades when it comes to major sports championships. The Cavs, furthermore, might still be closer to surrounding James with a title-worthy roster than any team he could join in 2010 free agency, down as they are at the moment, if they can make at least one more major addition to the roster this summer.
Said veteran NBA agent Bill Duffy, whose firm represents Yao and other top players such as Carmelo Anthony and Steve Nash: "Winning is what resonates internationally. That's why teams like the Yankees, Lakers and Celtics are so huge [overseas]. There's an inherent value in that kind of success. The brand of the Chicago Bulls is still at such a high level internationally because they won six championships with Michael Jordan.
"When Pau Gasol was in Memphis, I don't think it really moved the needle in Spain because his team didn't win [enough]. Now I would venture to stay that interest in the Lakers in Spain is at a much higher level. Winning is what resonates. Everything else is hypothetical."
Marc Stein is the senior NBA writer for ESPN.com. To e-mail him, click here.
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