It's hard to figure what the New York Post story on Nets possible cost-cutting is about. It shows up on the business page, not the sports page, for starters. And the reality of the last several days events seem to fly in the face of its premise, "Mikhail Prokhorov, with hopes of winning a $1 billion valuation for his team, has agreed to end his free-spending ways."
First of all, winning a $1 billion valuation isn't something that Prokhorov needs to do. He's said last week that he's not interested in selling and there's no indication that he's changed his mind in a week. Moreover, the Nets ownership have long thought the team is worth a $1 billion, ever since the lowly Kings were sold for $535 million a year ago. This month's proposed sale of the Clippers to Steve Ballmer for $2 billion, in fact, has led some to suggest the Nets are worth $500 million to a billion more than their L.A. counterpart.
As for cost-cutting, how's that going to work. With only 10 players under contract, the Nets contractual commitments for next season stand at little less than $90 million and that doesn't include whatever free agents Paul Pierce and Shaun Livingston get. The chances of the Nets going into next season with another $100 million payroll seem high ... unless the Nets starting dumping salaries this week. That is unlikely in the extreme. The Nets have a chance, if they compete at a high level, to make further inroads in the Knicks fan base. That would add further value to the franchise. Do the Nets want to cut costs? No doubt, with a $50 million loss on their balance sheet. Will it affect the team? That's a different story.
Of course, there is one group that would benefit from the Post story: minority owner Bruce Ratner's Nets Sports and Entertainment. He has hired an investment banker to take bids on the 20 percent NSE owns in the team and in fact, the Post'sJosh Kosman, bases a lot of his reporting on comments from those who have seen the investment banker's pitch documents. If investors believed Prokhorov was cutting costs, helping the bottom line, that would make it easier for the investment banker, Evercore, to get a high bid. (If NSE does get a big offer, Prokhorov has the right to match it.)
There is one tidbit of interest in the story: just how much local and national TV rights would add to the Nets bottom line.
The loss-making Nets are projecting they will swing to more than a $50 million profit in the 2016-17 season through a combination of cost-cutting and sweeter media deals, according to the sales books being distributed to potential bidders on the Ratner stake, according to two sources who have seen the books.
Brooklyn currently gets a relatively puny $20 million a year from its local TV deal with the YES Network, sources said, but that is due to be reset to about $50 million beginning in 2017.
Also, a new league-wide NBA deal is expected to put an additional $30 million a year into each team’s coffers.
Expect this will also be a question for Billy King during Wednesday's media availability and like questions related to the draft, don't expect much illumination here either.
Nets owner to trim spending to get $1B valuation - Josh Kosman - New York Post