Alibaba co-founder Joseph Tsai will purchase the 49 percent stake in the Brooklyn Nets that owner Mikhail Prokhorov has long been trying to unload, per ESPN.com’s Adrian Wojnarowski and Zach Lowe.
The 53-year-old executive vice chairman of the Chinese e-commerce company will buy the minority stake for roughly $1.13 billion — 49 percent of a $2.3 billion valuation of the team — with an option to assume majority ownership of the franchise from Prokhorov in 2021, according to the report.
Prokhorov became majority owner of the Nets in 2010, when he purchased an 80 percent stake in the Nets and a 45 percent chunk of the Barclays Center project for $223 million. In December 2015, the Russian billionaire purchased the remaining interest in both companies for an additional $285 million.
It didn’t take long for Prokhorov to sour on NBA ownership. Even before he assumed full control, he was reportedly “listening to offers” in June 2014. Six months later, he hired a firm to help sell the team. And in November 2016, he hired an investment bank to lead the search for a “local minority investor.” This past April, he announced in Russia that “49 percent of the Brooklyn shares are up for sale.”
Once the Houston Rockets sold for a record $2.2 billion in September, the New York Post reported that Prokhorov was seeking a similar price for the Nets while maintaining ownership of the Barclays Center.
This latest iteration of a deal will reportedly give Tsai the option to purchase a majority stake in the Nets in four years. Prokhorov will maintain oversight of the Nets’ basketball interests in the meantime. He will continue to own the Barclays Center and reportedly extend the team’s lease of the building.
Prokhorov has lost money on the Nets and Barclays Center almost every year, including a massive $144 million loss during the 2013-14 season, following the trade of three unprotected first-round picks and a pick swap to the Boston Celtics for Kevin Garnett, Paul Pierce and Jason Terry. That deal sent the team into a spiral, with an ever-devolving overpaid roster and no draft picks to rebuild the franchise.
However, the hirings of general manager Sean Marks and coach Kenny Atkinson have brought back some respectability to the Nets. They finished with the league’s worst record last season, but the patchwork roster played hard for Atkinson, and Marks added D’Angelo Russell, Allen Crabbe and several other pieces over the summer. The early returns this season have been encouraging.
Because the Nets play in the largest media market, they remain an attractive franchise for any businessman savvy enough to field a competitive team. Forbes pegged Brooklyn as the NBA’s seventh-most valuable franchise at an estimated price tag of $1.8 billion — less than the valuation upon which Tsai’s deal is reportedly based, although the publication’s team values are traditionally low. The same report valued the Rockets at $1.65 billion before Leslie Alexander sold the team for 33 percent more.
Forbes listed the team’s operating income at $15.7 million for the 2015-16 season — $125.5 million less than the poorly run crosstown New York Knicks — but ESPN.com reported last month that the Nets lost $44.3 million last season, just $800,000 less than the Detroit Pistons’ league-high annual deficit.
Tsai represents further hope for the franchise. The Taiwanese-born businessman earned undergraduate and law degrees from Yale University, where he played lacrosse, and he is worth an estimated $8.9 billion. He helped Chinese e-commerce company Alibaba become the world’s largest retailer and of the 10 most valuable companies around the globe, joining Facebook and Amazon. His arrival in the NBA is the latest in a series of tech wealthy tech executives joining the league.
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