NetsDaily Off-Season Report #16

In our latest Off-Season report, we look at Mikhail Prokhorov's belief that he can turn the Nets into a billion dollar franchise, evaluate the off-season with a positive spin, review Billy King's draft record, ask if the Nets are the youngest team ever (No, but close), explain our panic on the train and in general have a lot of fun with numbers.

Every Sunday, we’ll be updating the Nets’ off-season with bits and pieces of information, gossip, etc. to help take the edge off missing the playoffs, relying on the Nets’ beat reporters and others who have slipped interesting stuff into larger stories and blogs...not to mention our own reporting.

Going for a Billion

Perhaps it got lost in translation or perhaps Mikhail Prokhorov confused things by failing to note that when he talks about his investment in the Nets, he's talking about his investement in the Nets, Barclays Center and Atlantic Yards. 

No matter.  While some may laugh at his contention that "the Nets" will be worth $1 billion in 2015,no one should rule out the possibility that his $200 million investment will balloon to $1 billion in five years.  In fact, one can see
how it could easily happen. 

Let's first break down what Prokhorov has already laid out.  There's the $200 million "purchase price". It actually represents a small part of what he has invested.  In addition to the $200 million, he agreed to 1) assume 80% of the
team's debt, which amounts to about $175 million; eat up to $60 million in losses while the team is still in New Jersey; and provide $76 million in financing for the arena infrastructure, for which Bruce Ratner couldn't get investment grade financing.  That's a little more than a half-billion dollars.  In addition, he's agreed to pay $4 million to break the Nets' lease on the IZOD, permitting the team's move the Newark.  What's he get in return: 80% of the Nets and 45% of Barclays Center which at $1 billion will be the most expensive arena ever built in the world, and an option to buy up to 20% of the overall Atlantic Yards project, valued at more than $6 billion.

And as Billy May used to say, "Wait there's more!" Much more in fact.  Under his deal with Ratner, Prokhorov agreed to provide stop-gap funding if Ratner needs it during the arena construction...but for a price.  If there are financing
shortfalls, Prokhorov will step in, but in return gets the right to convert debt to equity, meaning he can raise his stake in the (billion dollar) arena to 80%. All that is according to a Standard and Poor's analysis of the project, as
reported by Norman Oder's Atlantic Yards Report.  A team insider confirms all that and notes the possible loss of the arena doesn't matter much to Ratner, since Ratner's main interest all along has been the residential and office space that will fill out the rest of the 22-acre site at Atlantic and Flatbush avenues. 

And what about that 20% option in the overall project? The details of that agreement have never been revealed but a respected Russian financial publication has reported that Prokhorov can exercise that option for another $120 million.  Remember, we are talking about a project with a $6 billion price tag.

So let's forward to 2015. Is it indeed possible for Prokhorov to have a billion dollar return on that initial $200 million investment? By then the arena will have been open for three years and Atlantic Yards should be well on its way; the team's bottom line will have improved with 1) the lack of an onerous arena lease, 2) new collective bargaining agreement that reduces costs, 3) a new national TV contract, and 4) a new local TV contract that will dramatically
improving on the current YES deal. Any improvement in the team's fortunes is also likely to have an effect, particularly if Prokhorov has invested big buck on the product. 

Getting to a billion dollars on his New York/Nets investment shouldn't be that difficult, in spite of the skeptics. 
Bottom line: Prokhorov's stock in trade has been buying distressed assets at a bargain basement price and then investing in them.  In Russia, as a result to that strategy, he was able to buy half of a media company that in addition to owning newspaper and television assets, controls 21% of all the internet domain names in Russia; the country's leading investment banking company; and increasingly large percentages in the country's biggest gold, aluminum and once again nickel mining operations. Now, he is branching out to build Russia's first hybrid car (an investment of $150 million) and a giant resort complex in Turkey ($100 million), among many other things. He may at some point become overextended--he told beat reporters he is spending 85% of his time recently on the Nets, but right now, he's riding high and fully confident.  That billion dollar claim isn't smoke and mirrors. He didn't do it for jollies.  It's part of a plan.

The Optimist's Guide to the Nets Off-Season

We remain blissfully optimistic about the future.  We're two-thirds through the off-season and we have had to read through pundits and bloggers assessments of the Nets' woes. The Nets are among the off-season's biggest losers, they say and they write.  Well, maybe, but we disagree.  Then again, we were never optimistic about LeBron James coming to New Jersey.  Hopeful, sure. Optimistic, No. (We may have said that before. Just put it down as we protesteth too much).

Still, when you put it all together, we like what the team has done, and feel compelled to go piece by piece in explaining ourselves.

The coach: Avery Johnson. Rod Thorn wanted a teacher and he got one.  As we explained last week, Johnson has a very, very good record developing young players. It doesn't hurt that he also has the best winning percentage among NBA coaches ever.  Picking two former head coaches as assistants is not something new head coaches often do, particularly since both are young and one of them, Sam Mitchell, is a former coach of the year.  That takes a lot of confidence and we like that.  We also liked the loyalty inherent in bringing in Popeye Jones, who worked with a lot of those young Dallas players, and the two Nets' holdovers, John Loyer and Tom Barrise.  (Counting Barrise's 0-2 record as an interim head coach and Loyer's one game fill-in for a grief-stricken Kiki Vandeweghe, the only Nets assistant without head coaching experience is Jones).

The draft: Derrick Favors and Damion James. The Favors-Cousins debate is over. May they both have great careers and since Cousins will only come to Prudential and Barclays once a year, that's a good thing. In the summer league, Favors got better as he went along, Cousins got worse...and now we know Favors had an additional burden in the form of a packet of material from his biological father, his first ever communication.  Avery may have gone overboard comparing Favors to, on various occasions, Dwight Howard, Kevin Garnett and Tim Duncan (why not Bill Russell?) but the kid is just what the team needs. As for James, who knew this kid had hidden within him, "a scoring machine", as David Thorpe described him. What's missed a bit in assessments of his game is HIS extraordinary athleticism.

The "third round": In the last mock drafts posted in the hour before the draft, Brian Zoubek was listed at #38 by Draft Express, #48 by ESPN and #55 by NBADraft.net. The morning after the draft, Jonathan Givony of Draft Express listed
all the players who he was surprised hadn't been taken 1 through 60. Zoubek was a the top of the list. Why not? In recent NCAA history, only one player had a better offensive rebounding percentage than Zoubek: DeJuan Blair, who the Nets passed on last year.  Ben Uzoh had been all over the mocks before slipping out of all but one--ESPN's--at the end. Chad Ford had him at #53.  Still, he could wind up as the third point guard.  And again, the Nets are the one of only two teams to give partially guaranteed deals to undrafted players...the other being the Warriors who signed Jeremy Lin out of Harvard. That's a good sign.

Free agency: First off, we consider claims that the Nets overspent on role players a bunch of baloney. How can you be accused of overpaying when you haven't yet reached the NBA salary minimum yet for next season? The Nets failed to find a star (and with all the uncertainty and a 12-70 record staring agents and stars in their face...who could be surprised) So they went out and built a rotation...a young, athletic and hungry rotation.  They also filled in some empty spaces. Travis Outlaw is the small forward, a job handled (and poorly) by committee the last two years. Jordan Farmar is a healthy (and sane) backup point guard who is HIGHLY competitive and has two NBA championship rings. Anthony Morrow is just want the team needed last year: someone who can come into a game and light it up from outside...and know this, Morrow is not just a three point shooter. He can and does find the rim in a lot of different ways...and anyone who has read his tweets knows he is highly competitive and motivated. Johan Petro will replace Josh Boone and Tony Battie at back up center.

The Morrow and Farmar signings haven't been controversial, particularly since Farmar has a player option in the third year, thus reducing the Nets commitment to him. Outlaw and Petro, however, are treated like highwaymen, robbing the small town bank and riding off into the sunset.  Really.  The Nets don't have the MLE or LLE this summer because those exceptions are only available to a team under the cap. Would there be as much bellyaching if the Nets had given Outlaw the MLE and LLE?  Because basically, all they got was a bit more.  Outlaw is a bit like Farmar in one aspect: he has never played in a system where his greatest talents have been fully utilized. Outlaw is a player who should flourish on the open floor, in an uptempo game, just as Farmar should in a system that isn't the triangle. Portland never played an uptempo game. They are always among the leaders in fewest possessions per game. Nate McMillan likes his slow paced game. One NetsDaily fan theorized on what Outlaw might do in an uptempo game as a starter, comparing him to Rudy Gay on a per minute basis. It was optimistic but had some validity...and Outlaw does something Gay does not: play defense.

Petro, along with Outlaw, has gotten the most grief from fans and pundits alike...$10 million for a center who almost returned to Europe before filling in for Kenyon Martin at season's end in Denver!? Petro, we think, has potential--we
did have good seats for the best game of his career at IZOD and really, everyone overpays for big men. And the reaction to his signing pointed up the difference between Nets fans, who waver between skeptical and cynical, and Knicks fans who waver between hopeful and delusional. Knicks fans, you see, think signing an obscure 24-year-old Russian seven-footer for $10 million over three years is a brilliant long-term investment while Net fans think signing a journeyman 24-year-old French seven footer for $10 million over three years is overpaying.  Mozgov averaged 7.5 points, 4.8 rebounds and 1 block in 18.9 minutes per game in Russia.  Petro averaged Petro averaged 3.4 points and 3.6 rebounds for Denver in 12 minutes per game in the NBA, where he has started 120 games.

Bottom line: the Nets have committed just about $76 million to the eight players they've signed this summer: $35 million over five years to Outlaw; $12 million over three years to Morrow; $10 million over three years to Petro; $8,576,640 over two years to Favors (with two more years at $10,761,516 at the team's option); $7.75 million over two years to Farmar (with a player option for another $4.25 million in the third year); $2.3994 million over two years to James (with two more years at $3,655,400 at the team option) and whatever partial guarantees given Zoubek and Uzoh on their one-year $473,604 deals. By comparison, the Bulls agreed to pay Carlos Boozer $80 million over five years. We're not saying we'd rather have those eight than Boozer--or some combination with Boozer.  We're saying the argument that the Nets overpaid doesn't hold up. None of those guys are over 25 years old. Five are 23 or younger. They're small short term investments in comparison to all the megadeals of the summer. If they don't work out, they're not a big deal. As Mikhail Prokhorov says, he is happy the Nets haven't "splurged" on anyone...at least yet.

The GM...and assistant GM: the signing of Billy King has gotten a lot of heat from pundits. Did he overpay for mediocre players? Yes. Was he impatient with coaches, at one point paying three of them? Yes. Did he trade for an aging, infirm Chris Webber, screwing up his cap space and whatever chemistry the Sixers had left? Yes. And most of all, did he hang on to Allen Iverson longer than he should have?  Sure thing. To be sure, he bears a lot of responsibility for those moves, although the last one seems to have been an ownership issue.  Of course, he also knew when to dump Dikembe Mutombo on the Nets, understanding rule changes would limit his effectiveness and make his contract a joke. He didn't have to buy out Mutombo. Rod Thorn did. And he did leave his successor, Ed Stefanski with a lot of cap space that Stefanski then splurged on Elton Brand? Yes.  As the next segment will show, he did very well at the draft...and Larry Brown recently endorsed his team-building in the late 1990's, signing and trading for defensive types to bolster Iverson.  As for those who complain the Nets never even talked to Kevin Pritchard...why is Pritchard sill unemployed and likely to remain so on October 1?  As for Bobby Marks, whatever management capability the Nets retained during the final days of the Ratner era were to his credit...maintaining the cap space, organizing the data for the draft and free agency all the while retaining that least valued of management strengths: institutional memory.  We're willing to give both of them their chance.    

A couple of things disturbed us during the off-season: giving up Chris Douglas-Roberts and Yi Jianlian for the Bulls 2012 second rounder and sending Yi Jianlian and $3 million to the Wizards for Quinton Ross were risks...and they didn't pan out.  If the Nets get to use their $14.95 million cache of cap space, then it might have been worth it.  But will there be any opportunities?

King Feels the Draft

We're a bit mystified about the conventional wisdom that Billy King doesn't have a good eye for talent, that his drafts were lacklustre.

Every GM makes mistakes in the draft, of course, even Joe Dumars, but a review of King's time in Philly indicates that King did well when picking in the lottery, found solid NBA players at the end of the first round and discovered value deep into the second. He also signed at least one undrafted player who became a top-notch defender.

As one of his former players in Philly, Eric Snow, told Al Iannazzone this week, "He’s got a great feel for the unseen."

So, let us review…an incomplete but telling list:

—1999: drafted Todd MacCulloch with the 47th pick.

—2000: drafted Speedy Claxton with the 20th pick.

—2001: drafted Samuel Dalembert with the 26th pick.

—2002: traded guard Speedy Claxton to the Spurs for Mark Bryant and the draft rights to John Salmons, taken with the 26th pick.

—2003: bought the Nets' second round pick, the 51st pick, and used it on Kyle Korver. Cost: $140,000; Traded the draft rights to guard Paccelis Morlende to the Sonics for the draft rights to Willie Green, taken at #41.

—2004: drafted Andre Iguodala with the 9th pick.

—2005: drafted Louis Williams with the 45th pick.

—2006: drafted guard Thabo Sefolosha (13th pick), then traded his draft rights to the Chicago Bulls for the draft rights to guard Rodney Carney.

—2007: drafted Thaddeus Young (12th overall pick), Daequan Cook (21st overall pick), then traded the draft rights to Cook, a 2009 second-round pick and cash to the Miami Heat for the draft rights to Jason Smith, taken with the 20th pick.

A GM who can find any value after #40 (MacColluch, Green, Korver and Williams...Korver and Greene in the same draft); get solid NBA talents in the late first round (Claxton, Dalembert, Salmons); and use lottery picks to get players like Iguodala and Young deserves respect.

To suggest that Iguodala and Young were no-brainers ignores what other teams around his pick wound up with.  Iguodala was taken between Rafael Araujo and Luke Jackson; Young was taken between Acie Law and Julian Wright. Same with his second round gem, Louis Williams.  Williams was taken after Roko-Leni Uric, Chris Taft, Mile Ilic and Martynas Andriuskevicius. Of all those players only Julian Wright is currently under contract in the NBA.

He may have made some mistakes in the draft and certainly in other areas--like doling out mega contracts to mediocre players, but in the critical (to the Nets) area of getting value for late first and second round picks—and not blowing high lottery picks, few have a better record...and that includes the guy who hired him.

Youngest, tallest ever?

The Nets are young, but they are not going to be the NBA's youngest ever. They could be in the top five, however.  The two youngest teams in league history were the 2000-01 Chicago Bulls and 1953-54 Baltimore Bullets, both at around 22.9 years old. Those teams won 15 and 16 games, respectively.  The third youngest should give Nets fans some hope.  The 2008-09 Trailblazers averaged 23.8 years old...and won 54 games. The fourth youngest, apparently, was the 2006-07 Celtic team that won only  24, roughly the same age as the roster.  The Nets current roster, with 12 guaranteeed contracts and two partially guaranteed deals, is right round 23.6.

No matter where they stand in league history, This year's team is  certain to be the youngest in franchise history. Derrick Favors will be the youngest Nets player ever at 19 years, 3 months and 1 week on opening night. He'll also be the youngest player in the league this year.

They also could also be the best three point shooting team in franchise history, with no fewer than six players capable of hitting between 35 and 45 per cent of their shots from deep: Anthony Morrow, Jordan Farmar, Courtney Lee, Travis Outlaw, QUinton Ross, Damion James, even Devin Harris...during a good year.

It's possible they will also be among the franchise's tallest ever ...particularly if you exempt the seasons where the team had one super tall player in Shawn Bradley or Gheorge Muresan. 

Brian Zoubek is listed at 7'1" and truth be told, so should Johan Petro and Brook Lopez.  Back in 2005, when he was drafted, Petro was listed at 7'1" with a 7'2 1/2" wingspan at the Eurocamp in Treviso, Italy. He's listed at 7'0" now. We don't know why. We don't think he's shrunk and he certainly towered over his newest teammates earlier this month.  Lopez was listed at 7'0 1/2" when he was measured at the Pre-Draft camp in Orlando two years ago.  Maybe he's trying to look "less tall" as his boss says he does. (The Nets did have four seven footers in 2006-07 in Nenad Krstic, Jason Collins, Mikki Moore and Mile Ilic...but one of them was Mile Ilic.)  After that, there's 6'10 1/2" and maybe still
growing Derrick Favors; two guys at 6'9"--Travis Outlaw and Kris Humphries; 6'8" (actually 6'7 3/4" as measured) Damion James; and four guys between 6'5" and 6'6": Terrence Williams, Quinton Ross, Courtney Lee and Anthony Morrow.  Devin Harris, Ben Uzoh and Jordan Farmar, all around 6'3" fill out the roster.

Power Forwards for Sale?

Last week, we listed a few point guards who we thought the Nets would be interested in if they are indeed going for "glue guys".  This week, we're going to take a look at a couple of young power forwards who play for teams that appear to have decided to go in a different direction, leaving these guys available.  In both cases, their teams have to be thinking about the luxury tax and may not need a player in return.

Ersan Ilyasova is a 6'9" combo forward who is bulking up this summer in hopes of moving from SF to PF. His team, however, seems to have decided there isn't a lot of room for him on the court at either forward position.  The Bucks have gone out and signed Drew Gooden, drafted Larry Sanders and traded for both John Brockman and Corey Maggette.  Since they already had Richard Mbah a Moute and Carlos Deflino, doesn't seem to be a lot of room for Ilyasova, something the Buck  beat writers have suggested. He makes $2.32 million this season and $2.54 million next season, but only $400,000 is guaranteed.

Dave D'Alessandro has mentioned Ilyasova as someone the Nets might be interested in.  He certainly has potential...at least on the offensive end.  He hit 89 three pointers last year from the forward position and is quite athletic.  He also grew up in the Soviet Union (hint) but now plays for the Turkish National Team. 

The second player out there is Brandon Bass of the Magic.  Bass, at 6'8", is a power forward...period.  He's being paid $4 million over each of the next three years, making him a bit more expensive.  Bass thrived under Avery Johnson, but has done nothing before or since Dallas.  He averaged 8.4 ppg and 4.5 rpg in 19 minutes a game over 160 games in Dallas. But after signing a $16 million deal with the Magic,  Bass played in only 50 games for the Magic, averaging 5.8 ppg in only 13 minutes a game.  The Magic are way over the luxury tax and don't seem to have much love for Bass, focusing instead on Ryan Anderson as their backup 4.

Final Note

We got quite a fright last week on the train.  As we scrolled through our Twitter feed, the following came up: "Sussman says goodbye..."  WHAT?, this can't be!  It's taking that "All New" thing too far!!  It's an outrage!!!  Well,
as it turned out, as we frantically opened the tweet, we learned the full message was "Sussman says goodbye to Thorn".  Whew.  The Sez is one of the few anchors left on this ship.  Can't just throw him overboard. (Are we mixing
metaphors? No problem. He'll let us know.)