Report: Prokhorov takes full ownership of Nets in $1.9B deal
After more than a year of reports and speculation surrounding his interest in sticking around New York for the long haul, Mikhail Prokhorov has apparently decided to put even more of his money where his mouth is.
Bloomberg’s Scott Soshnick reported Wednesday that the NBA “has approved ownership transfer of the Brooklyn Nets and Barclays Center” to the Russian billionaire, in a deal that values the team and its home arena at a total of $1.9 billion — a cool $400 million more than the number Forbes forwarded in its annual list of franchise valuations back in January, but nearly $1 billion less than the total valuations for the Nets and Barclays reportedly used in discussions between Nets ownership and Guggenheim Sports and Entertainment Assets, the owners of the Los Angeles Dodgers, about a prospective “combination of assets” in October of 2014.
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The Russian billionaire spent bought into the then-New Jersey Nets and the development project on the arena that would become Barclays Center in 2010 for $223 million. As of Wednesday, Prokhorov owned 80 percent of the Nets and 45 percent of Barclays through his company, Onexim Sports & Entertainment, with the remaining 20 percent and 55 percent, respectively, owned by Forest City Enterprises, led by Bruce Ratner, who has been part of the Nets’ ownership group for more than a decade and was the architect of the franchise’s move from New Jersey to Brooklyn before the 2012-13 NBA season.
Ratner’s company is “converting to a real estate investment trust (REIT) on January 1 which limits the types of assets it can control,” with neither basketball teams nor arenas fitting the bill, according to NetsDaily, which says the transaction between Prokhorov and Ratner is “expected to involve the exchange of as much as $400 million.”
Yahoo Sports NBA columnist Adrian Wojnarowski reported in June of 2014 that Prokhorov, intrigued by the $2 billion purchase price that Steve Ballmer shelled out for the Los Angeles Clippers, had become “open to overtures from potential buyers” for the Nets, though he hadn’t initiated any such conversations or put up a “for sale” sign or anything.
“My position is that I will not give up control of the team,” Prokhorov said in November 2014, according to AFP. “But I am quite happy when someone sends me a nice offer, without taking my control. I think for the time being nothing is imminent, but I still think it’s not bad to just listen.”
Subsequent reports this January that Prokhorov had hired a firm to help him sell the team suggested he might be doing a bit more than just listening, though a Nets spokesperson insisted no deal was imminent, and that this was an “always be prepared” sort of move. Wednesday’s announcement raises questions about just what Prokhorov’s intentions might be, as laid out by Andy Vasquez of The Record:
The Russian billionaire has said repeatedly that he’s not interested in selling the team, or giving up majority control. And with full ownership, it’s now easier for him to sell a minority stake in the team.
But with complete control, it also becomes much easier for Prokhorov to sell the whole package. And Prokhorov would net quite the profit. Back in 2010, he paid only $200 million to take over 80 percent of the Nets and 45 percent of Barclays Center. That stake is now worth nearly 10 times as much.
The Nets, alone, aren’t worth the $2 billion that Steve Ballmer paid for the Clippers in 2014 — that price did not include their arena, Staples Center.
But they’re likely worth equal to or more than the other NBA franchises that have been sold recently: last year the Milwaukee Bucks were sold for $550 million, and earlier this year the Atlanta Hawks were sold for $730 million.
Once you start talking about profit margins in the billions, with a B, you’d be a fool not to at least consider your sale options. Plunking down more cash to take full control of the Nets and Barclays Center would seem to give Prokhorov more of those.
Selfishly, though, here’s hoping he sticks around. The game’s a bit more fun when there are more cartoonish characters who make promises to get married if his team doesn’t win a title in five years (even if he later reneges on it) , randomly shows up at training camp in sweats to run his team through ball-handling and core-strengthening drills, and bids a not-so-fond farewell to a head coach who snuck out like a thief in the night by saying, “Don’t let the door hit you where the Good Lord split you.” I’m not sure I’m ready to say goodbye to him — using those words or others — just yet.
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Dan Devine is an editor for Ball Don’t Lie on Yahoo Sports. Have a tip? Email him at [email protected] or follow him on Twitter!
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