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Michael Jordan will have a little more time to work on his short game and steer his NASCAR team to success when the basketball legend completes the sale of his majority stake in the Charlotte Hornets.
The announcement of MJ’s departure has been met with cheers from many fans itching for a contending franchise and hoping that the new ownership group led by Gabe Plotkin and Rick Schnall can provide a fresh perspective. But for others, his exit is bittersweet, especially for the NBA, a league that prides itself on diversity and inclusiveness.
The NBA will have zero black principal owners once the $3 billion sale is approved. It’s a paradox, not just because roughly 70% of the league’s players are black, but because black culture has been ingrained in the NBA for decades, from hip-hop (J. Cole is included in the future Hornets’ ownership group) to streetwear fashion, with its biggest stars that transcend the hardwood.
Black Entertainment Television (BET) co-founder Bob Johnson sold the Hornets (formerly known as the Charlotte Bobcats) to Jordan for $275 million in 2010.
In a free market society, Jordan is entitled to go out at a value that is fair to him, Johnson said in a telephone interview. Johnson sold BET to Viacom for about $3 billion in total consideration in 2000.
While who buys the team isn’t Jordan’s problem, it is a concern for the league.
When Johnson bought the expansion Bobcats in 2001, he says former NBA commissioner David Stern wanted two things — someone with the funds to close and a group led by someone who was African-American who worked for Johnson. The historic transaction made him the first black principal owner of an American professional sports team. When he was ready to unload the team nine years later, Johnson tipped Jordan, who was not only a friend but had the necessary funds.
“We solved the problem of how blacks get into the league,” Johnson said in a telephone interview. “You need the money, and it doesn’t hurt to have connections.”
The NBA wants to create maximum value for its 30 controlling owners, even as franchise valuations skyrocket to unprecedented levels. And the league office has no obligation to implement special equity rules or affirmative action to increase black participation among the ownership ranks. Neither are Fortune 500 companies.
But many of these entities are not as tied to urban markets and are not as inextricably linked to the black community as the NBA. Johnson, considered the first black billionaire in terms of net worth, acknowledges the issue of racial disparity among owners, but believes he would be hypocritical to criticize the same financial system that helped him generate double-digit returns.
However, Johnson’s story suggests another potential model for increasing black ownership. When Johnson launched BET in 1980, Liberty Media chairman John Malone put up $500,000 in equity and debt, financed the property, but let Johnson retain 80% control. Malone, who owns several sports properties, received $700 million in Viacom stock at the sale 20 years later. This route could work in sports, but it would have to overcome one major hurdle: Owning a franchise gives an investor a unique kind of influence.
“You’re going to have to change the nature of the beast,” Johnson said. “When an owner walks into an arena and fans see them and you’re on a winning streak, that’s one of the biggest thrills you can ever have. It’s an ego thing. … You’re going to have to change that mentality, such a one [owning] a company.”
The NBA has fared well compared to other major leagues when it comes to diversity hiring, receiving a top grade on the race and gender report issued by The Institute for Diversity and Ethics in Sport (TIDES) last year. The association, which has some of the most progressive owners in sports, is also the only one of the Big Four to have two presidents within the league office who are black (the NBA G League’s Shareef Abdur-Rahim and the NBA’s Byron Spruell).
The NBA is far from alone in its lack of diversity at the ownership level. The NFL also does not have a majority black owner, nor does the NHL or MLB. Nika White, a principal DEI consultant, believes pro sports leagues have favored profitability over moral responsibility. White, a business owner, says she doesn’t criticize capitalists, but believes owners should pay more attention to creating equitable partnerships in local black communities.
“It’s a missed opportunity because it doesn’t allow the sports world to reach its full potential and be optimized,” White said in a video interview.
The NBA, which has a robust program of community initiatives, currently has a pair of minority principal owners in the Brooklyn Nets’ Joe Tsai and the Sacramento Kings’ Vivek Ranadive. Alex Rodriguez, in collaboration with Marc Lore, is in the process of taking over the majority ownership of the Minnesota Timberwolves.
And there has been an increase in black limited partners, including former NBA stars Grant Hill, Dwyane Wade and David Robinson. LeBron James, who like Jordan has become a billionaire, has spoken of his desire to own a team when he retires, but the level of investment remains unclear.
Johnson and Jordan solved the puzzle of how to get a black majority owner in the NBA the old-fashioned way – money and connections. But with the value of teams rising so quickly, that kind of transaction may never repeat itself unless the personal connection also has ungodly sums of money.
The other possibility, a majority owner ceding control, seems almost as unlikely. After all, owning a team is a good business proposition that also allows you to rub shoulders with dignitaries and invite friends to the owner’s suite for big games. That’s power, says Johnson. “Who wants to give it up?”
It’s unclear, but finding someone willing may be the best way forward.