For the N.B.A., the world gets smaller

(breakingviews.com) -- The U.S. sports establishment finally seems to have embraced all the global economy has to offer.

The country's professional teams have happily imported players and exported game broadcasts and merchandise to great monetary gain. But with few exceptions they have remained averse to foreign owners. The financial crisis seems to have brought this protectionist streak to an end.

New York property developer Bruce Ratner is selling 80% of the National Basketball Association's New Jersey Nets and a 45% stake in the team's new arena to Russia's richest man, Mikhail Prokhorov, for $200 million. The 6'7" playboy could be the first non-North American to control a major U.S. sports franchise without any strings attached.

Other deals are less common than a successful half-court hook shot. A Chinese investor is buying a minority stake in another NBA team, the Cavaliers. And Major League Baseball allowed the Seattle Mariners to have a Japanese owner in 1992, but substantially restricted his involvement.

While the U.S. has been adept at attracting foreign capital to its industries, the domestic sports business has been a loser in this arena. Top-flight British soccer teams, German hockey squads and prized thoroughbreds all have owners from Russia, the Middle East, Asia -- and the U.S. But the almighty dollar has a way of eventually breaking down barriers.

Ratner is just another overextended millionaire under financial pressure while Prokhorov was a rare shrewd oligarch, converting much of his holdings to cash right before the world went to pieces.

The deal is still no slam dunk even if the towering Prokhorov might become the only NBA owner able to attempt to match his players on the court.

Three-quarters of the league's owners must sign off on the transaction. Ratner also needs to secure additional financing to break ground in December on the ambitious $4.9 billion Brooklyn development where he plans to relocate the team, or risk losing tax-free government bonds that have been pledged and a lucrative sponsorship deal from Barclays.

If those hurdles can be cleared, it could prove a major victory for U.S. sports. The Nets deal may ultimately hinge on a real-estate investment, but Prokhorov could bring advanced Russian training habits to the team and build its brand in new parts of the world.

But that's not the only reason U.S. sports team owners may regret waiting so long to be receptive to foreign ownership. By restricting investment to North American millionaires, they will have artificially kept franchise prices down. The increased demand added to the limited supply should make existing owners want to stand up and cheer -- in Russian, Arabic, and other languages.