NJ Nets deal doesn't open sports M&A floodgates

CHICAGO (Reuters) - The hapless New Jersey Nets basketball team's success in finding a buyer this week may have raised the hopes of would-be sellers of sports franchises nationwide, but without a proliferation of Russian billionaires, such deals may remain few and far between.

While only six or seven teams are publicly for sale among the four major North American sports leagues -- the National Football League, Major League Baseball, National Basketball Association and National Hockey League -- more teams are available for the right offer, sports bankers and investors said.

Wealthy overseas buyers like Mikhail Prokhorov -- Russia's richest man, who has agreed to buy the NBA's Nets -- also could become major factors in maintaining or even driving up franchise values.

"It's a very good time to buy a sports team. Cash is king," said Andrew Murstein, chairman of Sports Properties Acquisition Corp HMR.A, which has eyed several teams. "There's a lot of owners who are having financial problems. There are many more sellers than buyers in the current market."

Before deals for U.S. sports teams can start to gain some velocity, however, banks must first loosen access to capital.

Then buyers and sellers must find common ground on a price, which could be tough as the former see a weak economy and want a price break while the latter see their teams as long-term assets.

SPENDING CUTBACKS

"Everybody who wants to buy a house now thinks he can get it for a lot less, and the sellers if they don't need to sell are going to say this isn't the right time," said Sal Galatioto, president of Galatioto Sports Partners.

"The economy has depressed buyers' abilities and willingness to buy almost anything," added the banker, who advised the Ricketts family in its $845 million bid for the Chicago Cubs baseball team.

In addition to the tight credit market for buyers, teams have been tackled by consumer and corporate spending cutbacks.

"The market at the moment is dominated by troubled assets," said Steve Greenberg, managing director at Allen & Co. Clubs may not be struggling, but some owners are.

The NHL's Phoenix Coyotes filed for bankruptcy in May and the league is locked in a battle with Canadian billionaire and Research in Motion Ltd (RIM.TO) Co-Chief Executive Officer Jim Balsillie for control of the team.

A default led Texas billionaire Tom Hicks to put the Texas Rangers baseball club in an auction that could attract bids up to $550 million.

Meanwhile, estate planning issues led George Gillett to agree to sell the NHL's Montreal Canadiens for about $575 million, and the NFL's St. Louis Rams are available following the death of the team's owner.

But the numbers of deep-pocketed buyers have dwindled.

"There are less billionaires being created, and those who were billionaires before have had some of their wealth tapped out," said Richard Walden, managing director of JP Morgan's sports banking practice.

And buyers cannot expect a quick profit. "It's a generational purchase," said Lew Wolff, owner of the Oakland A's baseball team. "Most people buy (a team) and keep it."

Less wealth means prospective buyers are forming groups to buy teams and convince still-wary banks to loan them money.

"The banks are much less willing to underwrite," said Robert Tilliss, CEO of Inner Circle Sports, a merchant bank in New York focused on the sports industry. "That's a big, big issue in terms of getting deals done."

That could lead to more quiet deals, in which buyers approach owners who have not put their teams officially up for auction, bankers and investors said.

However, with only 122 teams among the four leagues and limited numbers of sales every year, prices have not dropped.

"If you want to own the Canadiens, you're only going to get one chance every 20 years or so," Greenberg said.

Still, wealthy foreign buyers with a desire to tap the U.S. market could goose the market.

In May, a group of Chinese investors agreed to buy a minority stake in the NBA's Cleveland Cavaliers and this week's deal by Prokhorov would make him the league's first non-North American principal owner.

The continuing globalization of the sports world will only speed the process.

"The United States is still considered the safest place in the world to invest," Galatioto said. "It's a great way to diversify where your assets are held; and if you want name recognition for your company or yourself, owning a professional sports franchise is a great way to get it."

(Reporting by Ben Klayman, editing by Gerald E. McCormick)