Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

NBA Gets Assist from China


Stake in Cleveland Cavaliers just the latest Chinese hoop dream.

There's a question haunting our halls of government: Just who's going to finance the US's ballooning debt? In other words, who's going to keep buying US Treasury bills?

Until now, it's been China. Though it isn't clear whether that will continue, the Chinese government is finding more subtle ways to pick up little pieces of America.

Last weekend, the NBA's Cleveland Cavaliers agreed to sell a 15% stake in both the franchise and its arena to a group of Chinese investors. The agreement represents the first significant investment in a major sports franchise by Chinese investors.

The deal has been characterized as an ambitious move by American sports, and as an attempt to tap into the vast Chinese marketplace. The NBA is incredibly popular there; at the Beijing Olympics, the American basketball team drew nearly as many Chinese supporters as the Chinese team itself. The NBA has already established a joint venture in China to develop a basketball league and attendant professional arenas.

NBA commissioner David Stern told the New York Times that the deal would be "the natural next step in our relationship with China" and "very much a validation of our business expansion there."

From another angle, the deal seems like more of a coup for the Chinese investors. Buying the Cavaliers means buying a piece of pure Americana -- a hard-luck franchise in a hard-luck, Rust Belt city -- and also offers a greater potential return than those pesky Treasury bills.

The group also, by extension, gets a piece of Lebron James - the best player on the planet. (The Cavs are doing everything they can to ensure that James will re-sign as a free agent after next season.) Again, a wiser investment than Treasury bills - or investing in Blackstone (BX) and Morgan Stanley (MS), as one Chinese sovereign wealth fund did at the stock market's apex in 2007.

The only thing more wholesomely American than team sports? Owning your own home. And Chinese investors are getting in on that act, too. As I wrote in China Goes Shopping for Subprime, several American and Chinese companies have set up tours to show foreclosed properties to Chinese buyers, mostly in American cities.

Those tours might want to turn their attention to Cleveland, where 1 out of 13 homes stands vacant as a result of foreclosure, and property is selling for $5,000 a pop. Chinese fans could scoop up houses for less than the price of season tickets.

For a hard-luck city like this one, it may be the only viable redevelopment strategy.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos