Other than his questioning Mikhail Prokhorov's manhood, Mark Cuban also questioned his fellow billionaire's financial commitment to the Nets, saying, "You know, building a true professional team means having to spend money. We just haven't seen it."
Whether in jest or not, that has to sting. The Nets, particularly Avery Johnson, have talked about how much money the team has laid out. So we took a look at what Prokhorov has spent or committed so far on the Nets. It belies Cuban's comments. The Nets may not have signed big time free agents, but they are spending money.
Bottom line: we estimate Prokhorov has spent or committed about $600 million on the Nets since agreeing to buy the team a little more than a year ago. Sources range from reports by Nets beat writers, the Russian financial press, the New York Times, Wall Street Journal, Standard and Poors, the financial rating service...plus our own sources.
We also speculate why Cuban would say such thing. Hint: he's probably still paying Johnson!
—$200 million for the purchase of 80% of the team and 45% of the Barclays Center and an option to purchase up to 20% of the overall Atlantic Yards project (which he told Forbes Russia he’s unlikely to exercise.)
—$177 million in assumption of team debt. As part of the purchase, Onexim Group agreed to assume 80% of the Nets corporate debt, the largest, as a percent of debt-to-equity, in professional sports.
—$60 million in operating losses. Onexim agreed to accept up to that amount in operating losses while the team stays in New Jersey. That presumably includes the Nets' lease at Prudential Center.
—$4 million in IZOD Center lease penalties. In order to move the team to Newark, the NJSEA required a payment of $2 million per year for each of the two years the Nets will remain in New Jersey. (Uncertain if the $4 million is included in the $60 million in operating losses or a separate expenditure.)
—$77 million in arena infrastructure loans. After the arena company, owned jointly by Bruce Ratner and Prokhorov, found it difficult to market bonds for the arena infrastructure (separate from the $511 million tax exempt bonds for the arena), Onexim agreed to buy the bonds. They are convertible to equity in the arena in three years and could lead to Onexim gaining an 80% stake in Barclays Center as well.
—$66 million in free agent contracts: $35 million to Travis Outlaw, $12 million each to Anthony Morrow and Jordan Farmar, $10 million to Johan Petro, and $1 million to Joe Smith. (The Nets, of course, were willing to pay bigger bucks to the top free agents, offering nearly $40 million to Tyrus Thomas, $65 million to Rudy Gay, $70 million to Carlos Boozer and more than $100 million each to LeBron James, Chris Bosh and Dwyane Wade.)
—$10 million net increase in payroll by trading Courtney Lee for Troy Murphy.
---$3 million in cash considerations to facilitate the trade of Yi Jianlian to the Wizards for Quinton Ross. (The last time the Nets added a significant amount of cash to a deal was in 2004, when they sent $1.5 million to the Clippers to facilitate the Kerry Kittles trade.)
—$635,000 in partial contract gurantees: $450,000 to Graham; $100,000 to Sean May; $50,000 to Brian Zoubek; $35,000 to Uzoh. (In the six years under Ratner, the team had given out one partial guarantee, $25,000, to Robert Hite).
---$250,000 payment for the Springfield Armor hybrid arrangement. (Sources have said the Nets wanted to buy a team outright but couldn't because the D-League had no plans to expand in the northeast.)
—Several million dollars in salaries, benefits and equipment for basketball operations, whose staff has gone from 22 to 30 people under Prokhorov, and global marketing efforts. Beyond staff, there's also been equipment purchases, specifically in rehabilitation and video editing equipment, even specially equipped iPads for each player and coaching staff member. On the marketing front, Prokhorov has shelled out for the global preseason tour and a new Russian language website. The team will lose money by shipping two regular season "home games" to London this March.
So why might Cuban saying such a thing? Here's one possibility: Cuban is still paying a big part of Avery Johnson's contract. Johnson and his two lead assistants, Sam Mitchell and Larry Krystkowiak, are all still being paid on their head coaching deals with the Mavericks, Raptors and Bucks, respectively. Coaches’ contracts typically have off-set clauses. If they're fired and then get new jobs, what they get from their old teams is reduced--offset--by whatever they get from their new employers. The Nets have never disclosed what they are paying those three...and how much their old teams are still paying them.
But Johnson's old contract with Cuban called for him to get $4+ million from the Mavs this season. So, it's possible, even likely, the Nets are paying Johnson a small fraction of that amount and letting Cuban pick up the rest of the tab. Perhaps that’s why Cuban is giving his Russian counterpart some grief. He's still paying Johnson!