Make every shot a winner when acquiring professional sports teams

With the development of professionalism in sport, the level of involvement of private capital in professional sports teams has been continuously increasing, and the sports industry has gradually realised the importance of stimulating domestic demand. Professional sports teams are corporatised legal person forms, and as such are not only subject to the Company Law, but as entities that have the right (or the qualification) to participate in professional sports league games they are also subject to the standards of the industry, namely the administration of the pertinent industry administration authority. The authors will briefly describe the special procedure for acquiring professional sports teams and the key issues requiring attention, by taking basketball teams as an example.

Subject to Company Law

Being enterprises with independent legal personality, the procedure for the transfer of equity of professional sports teams is identical to that for ordinary companies. Usually, the acquirer will, depending on the circumstances, carry out legal due diligence, a dedicated audit, asset appraisal, etc., of the target company, execute the transaction documents and then complete the procedures for amending business registration/recordal particulars.

As to the issue of whether foreign-invested enterprises can invest in professional sports teams, on the one hand, it is necessary to refer to the Catalogue for the Guidance of Foreign Investment Industries, which currently does not restrict or prohibit such investment. On the other hand, it is necessary to look at the requirements in respect of investors in professional sports teams of the industry administration authority for the specific sport, for example, the Chinese Basketball Association prohibits foreign-invested enterprises from independently establishing CBA, NBL or WCBA league teams, or becoming the controlling shareholders of such league teams.