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NetsDaily Off-Season Report #24

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.

Red Dawn

Twenty three weeks of sheer misery followed by one week of wild, bacchanalian celebration. We speak, of course, of the restructuring of the Marcus Williams trade. Nah. We can’t fool ya. As the off-season ends and the preseason begins, it’s all about Mikhail Dmitri Prokhorov.

Anything can go wrong and as Nets fans we believe it will. It's in our DNA. But right now, we’re humming the Russian national anthem and wondering where in New Jersey we can get some delicious fresh cabbage.

As more and more details emerge, the deal looks better and better. It’s nice to have the NBA’s richest owner…in fact, the richest owner in all of professional sports. (Did we just write that? Let’s write it again…the richest owner in all of professional sports. Yeah, we like writing that.) Forbes puts Prokhorov’s wealth at a mere $9.5 billion, $500 million behind their estimate of Paul Allen’s net worth. Ha! Finans, the Russian equivalent of Forbes, says he’s closer to $14 billion and a Nets’ insider puts the number at "between $10 billion and $15 billion." Hell, we were happy at $9.5 billion! Not only will that permit the Nets to be a player in the 2010 free agency (the 2011 free agency, the 2020 free agency, etc.), it should end the Nets’ long standing debt issues, a big draw on its revenues. Prokhorov will eat all the team’s losses til they move to Brooklyn. If no one shows up at the IZOD the next two years, it’s on Mikhail! The team’s current debt gets dumped on our favorite Russian oligarch as well, or at least 80% of it.

What could go wrong? Oh, a lot could go wrong. Let us count the ways.

--The Court of Appeals could overturn lower courts’ dismissal of the critics’ eminent domain suit. It’s wound its way through federal and state courts for years now without success. Its chances of success appear limited. The court does not often overturn unanimous rulings from the court below and that’s exactly what happened in this case. Moreover, there is no appeal to the US Supreme Court. The critics already went that route and failed.

--Critics could file more suits…and almost certainly will. They claim that the changes in arena design and project timetable, among other things, should have necessitated a second environmental impact study, which would have taken months. The Empire State Development Corp. approved the redesign without a second EIS. Expect them to file suit soon on those grounds. That doesn’t necessarily mean that the project would be delayed even more. The critics would have to convince a judge that their case was meritorious enough to warrant a temporary restraining order on eminent domain proceedings and construction. How many times can they go to that well?

--Ratner and Prokhorov could fail to meet the Dec. 31 deadline for financing. That’s when all the money has to be in place or the arena construction bonds lose their tax exempt status. That would result in additional costs of more than $100 million and almost certainly scuttle the deal. Assuming the bond markets continue to heal, the financing job will be a lot easier now that Prokhorov has bought into the team. Better to be dealing on behalf of a guy worth $10 or $14 billion than a guy whose fortune has dipped below $100 million.

--Something shows up in Prokhorov’s personal background. Of all the scenarios this is the least likely. We speak on occasion to people who are, shall we say, in the know about spooky things…well, at least one of us does. Adrian Wojnarowski’s suggestion of some Russian Mafia ties is simply not true. There is "nothing" to suggest that, says someone who has seen the file. Is he close to Vladimir Putin, the Russian strongman (not that that would disqualify him)? "Close to the Kremlin," rather than Putin, we were told. And does he have the money? "For sure, for sure". The prostitution arrest? Not charged. Nor was anyone else. It’s not a "disqualifying" factor, said a Nets’ insider. Embarrassment is never a "disqualifying" event in the NBA. Ask anyone in Seattle. Nor is the fact that his Norilsk nickel mine emitted as much sulfur dioxide as France! It might hurt the NetsGoGreen program, though. It is, bottom line, about the Benjamins. As Alexander Wolff of Sports Illustrated notes, this is a league that a few months ago had to secure a revolving line of credit for its teams. They’re going to turn down Prokhorov (pronounced "Mon-ey" in Russian)? Please.

--Ratner’s propensity to overreach is manifested in some other way. This is the one that worries us most. We wonder what’s going on with the nearly 100 other investors in the Nets, in the arena, in the Atlantic Yards project. Where do Vinny Viola, Jay-Z, even the lovable novelist Mary Higgins Clark fit into the new picture? Can they be happy? We doubt it. What will they do to get back some of their investments?

Remember what we wrote in our NetsDaily FAQ on the team's future...

Viola appears to be in the lead position, having substantial capital—more than Semel but less than Prokhorov–and enough of the Nets’ preferred stock to thwart either of the other bids if he wants to. Or he could simply sell out if their offers are too good to pass up. Viola has made his money as a Wall Street trader and entrepreneur and will wait and see...

We haven’t heard yet from the minority investors. We will.

And what happens if Mikhail Dmitrievich gets back on his private jet and bids farewell to sunny Brooklyn? Nothing good. As Chris Sheridan wrote on ESPN…"The team would still be Ratner's, it would go back on the market, and there would immediately be a franchise as a candidate to relocate to Seattle (if a new arena deal is approved), Anaheim, Kansas City, St. Louis or some other city with designs on getting an NBA team."

We don’t like reading that. So bring on more vodka, dorogaya, let’s continue to celebrate while we can!

How does it change things? Oh, let us count the ways there too! Oh yeah, money for free agents and for the Nets’ young players certainly is important. But we found an interesting commonality in comments from two of Prokhorov’s best known former employees, Andrei Kirilenko, who played for him at CSKA Moscow, and Ettore Messina, his longtime coach.

"He's a very successful manager and he definitely wants to build the team rather than just start taking players," Kirilenko told the Salt Lake Tribune.

"Everything we did was like an N.B.A. team," Messina said to the Times. "We always had one of the top two budgets in the Euroleague. We were chartering 99 percent of our flights all over Europe. The arena was built for the 1980 Olympics, but he made it really nice, locker rooms just like the N.B.A."

Messina added Prokhorov is no Mark Cuban, participating in every management decision, hanging out at the practice facility.

"Prokhorov’s philosophy is very simple. He says, ‘I select the specialists, they do their job and at the end I evaluate.’ In the four years I was there, he never made a call on basketball."

It appears from those quotes that Prokhorov’s philosophy is all about professionalism, giving his experts the opportunity to succeed at a high level, providing his teams with the best equipment, the best environment for growth, etc. Ratner didn’t understand basketball. Prokhorov plays it. (Prokhorov is #23...natch. Scottie Pippen, yes, that Scottie Pippen, is #33. Arvydas Sabonis is there too.)

Speaking of philosophy, we leave this section with two quotes from Prokhorov’s personal blog, on his philosophy of life and business…

"You cannot eat all food, you cannot drink all wine, you cannot have all women, but that’s what you should strive for!"

"The biggest risk in business around the world is the risk of being ineffective. If you can't work under these conditions then don't get involved. I am an aggressive businessman, and want the businesses in which I invest to grow many times in value. I take big risks, but because I work at a large scale, the opportunities for growth are also great."

We’d like to add ours. "Давайте выпьем за успех нашего дела!" ("Let us drink to the success of our project!")

Thorn and Vandeweghe and Frank

Three expiring contracts, worth $10 million a year, Rod Thorn makes $5 million, Lawrence Frank $4 million and Kiki Vandeweghe around $1.5 million. (Brett Yormark has a contract through 2013 that pays him $2 million this year.)

There were rumors, courtesy again of Adrian Wojnarowski that the Nets will try to add Russian and Lithuanian basketball legends Sarunas Marciulionis and Arvydas Sabonis to the team. That’s nice. Indeed, Prokhorov does know the former NBA players, played with them in that charity event linked above. And Messina was rumored as a possible Frank replacement at the end of last season, long before Ratner flew to Moscow to talk with Prokhorov. He is currently coaching in Madrid.

But how real is that speculation?

There will be, as Al Iannazzone has written for the YES Network, a year long evaluation of the three front office types. If the Nets do well or seem to be progressing, then the evaluation will be in their favor. It’s difficult to imagine any decisions before season’s end. It will take that long to get things in order. Ratner and Prokhorov have said they expect the deal to close in the first quarter which ends March 31. That's if the eminent domain case is settled, the tax exempt bonds are written and Prokhorov gets his seal of approval from the Board of Governors. Only then, we figure, basketball issues will move forward and certainly should be in place by the draft at the end of June and then the 2010 free agency, starting July 1.

Putting aside the team’s record, which no one outside PNY Center thinks is going to be a winning one, the front office folks do have a few positives on their permanent record. No matter how much money Prokhorov has (and as noted above, he would be the richest owner in all of professional sports…yes!), the Nets wouldn’t have all that cap space without the maneuvering by Thorn and particularly Vandeweghe over the last year and a half. The pipe dream of signing two players to max contracts with all that cap space is now possible. Also, all those young talented players didn’t simply drive up to the PNY Center and say, "here I am." It was part of a plan. Good years by Yi Jianlian, Courtney Lee, Terrence Williams and Chris Douglas-Roberts would help solidify that record as well. Moreover, no NBA team has as many draft picks over the next three years as the Nets. They have a total of nine: two first rounders (including the unprotected Mavs pick) and a second rounder in 2010; a first rounder and two second rounders in 2011; and two first rounders (including the now lightly protected Warriors pick) and a second rounder in 2012. That's cheap labor.

Frank’s situation is more tenuous. He has more to prove, but at age 39, he has 215 wins (and 215 losses). The Nets have invested a lot of money in "L" and it should be noted some of the more successful NBA coaches, even those who didn’t play in the NBA, had nowhere near that win total at that age.

Yormark’s Challenge

Yormark does appear safe but when you are the richest owner in all of professional sports (cannot write it enough…cannot), you can eat a lot of bad contracts. Not that we're saying Yormark's contract is a bad one. Hold your fire, Barry.

Yormark now has a real opportunity in marketing the Nets, locally and globally. Brooklyn is more and more likely so he can push that. Locally, he also can capitalize on the buzz, which is extraordinary, in fact unprecedented for the Nets…five stories in the New York Times since Thursday, one on page 1. (Make it six. In the hours since we posted this blog, they published another.) A mention on Saturday Night Live. It can’t hurt salesmen’s pitches to note that the richest owner in all of professional sports is your boss. We can't stop. We admit it.

Most of all, there is the opportunity to create a global brand. Yi and Eduardo Najera are always among the most marketable NBA stars globally, Yi in Asia, Najera in Latin America. That’s a start. So is the word that all 82 of the Nets games will be broadcast in China this season. Now, he has Russia’s richest man, a well known figure in his homeland, as Nets' owner. Will the NBA put more Nets games on its 24/7 channel seen in Russia? Will the Nets set up a Russian language website, as they have in Chinese…both traditional and simplified Mandarin, we might note? Will they have to set up yet another row in the press section for Russian reporters, behind the row of beat reporters and Chinese media? And when will Yormark get on that flight to Moscow and St. Petersburg to seek sponsors and advertisers, as he did in Shanghai, Beijing and Hong Kong?

And what of Brighton Beach? That’s in Brooklyn, home of 350,000 Russians and Russian Americans. Already, local leaders have expressed their approval of the deal.

"This is great news and for the [Russian-American] community it will be huge," said community activist John Lisyanskiy, who also works in City Council Speaker Christine Quinn’s office.

Lisyanskiy told the Courier Life newspapers that he’s been trying for years to get them more involved in local affairs and the sale of the team to Prokhorov will bring out a lot of pride, which will ultimately get these new Americans more involved in local community life. Lisyanskiy told the newspaper that while Prokhorov has been controversial in some of his dealings, he is also well known for Russian philanthropy.

Assemblyman Alec Brook-Krasny, who represents Brighton Beach and Coney Island, and is a Russian-American immigrant, said the sale will probably trigger a big explosion in the local Russian media resulting in more Russian-Americans going to Nets games.

"I think it’s also a testament to the economy becoming so global that a person on one side of globe can buy a team on the other side of the globe," said Brook-Krasny. "I also hope that it will somehow positively affect Russian-American relations and New York Russian-American relations."

The Nets had buses ferry Chinese fans from Sunset Park in Brooklyn to the IZOD. There’s no doubt in our minds that the Nets will try to do the same with Brighton Beach.

A Little History

In thinking about the Nets place in the globalization of basketball, a couple of things come to mind. If Prokhorov does become the first NBA owner from outside North America, it would be the latest international milestone for the team that started out as the New Jersey Americans (during the Cold War).

The Nets were the first to draft an international star, taking Brazil's Oscar Schmidt in the 1984 draft. He had several other opportunities to play in the NBA, but declined them all in order to maintain his "amateur" status and continue to play in Brazil's national team.

And Drazen Petrovic was the first international NBA star, making the All-NBA team in 1992-93.

In the past decade, the Nets have had players from Mali (Soumalia Samake), Congo (Dikembe Mutombo), Senegal (DeSagana Diop), Canada (Todd MacCulloch and Jamaal Magloire), Mexico (Eduardo Najera), Serbia (Nenad Krstic and Mile Ilic), Croatia (Zoran Planinic), Slovenia (Boki Nachbar), Georgia (Vladimir Stepania), Romania (Gheorghe Muresan), China (Yi Jianlian) and for a short time, France (Jerome Moiso).

Some were good, some were bad, but the Nets have had a lot more and a lot more significant international players than the Knicks, for example.

The Fear Out There

It’s nothing like the Cold War, but in certain corners of the NBA blogging world, there is fear of the Red Menace, a giant machine that with military precision rolls right through the collective bargaining agreement, laying waste to cities like Cleveland, Miami, even Manhattan, its lead tank manned by the richest owner in all of professional sports.

They are most fearful in Cleveland.

The Nets are one of the few teams with enough cap space to make a major offer to LeBron James next Summer and provide him with a high-priced co-star. Cavs fans are well-versed in the the LeBron-Jay Z connection, and his Hova-ness is a co-owner (albeit a very minor one) of the Nets, something that could influence LeBron's decision next Summer.

But despite that connection, the Nets had appeared to be off the table as a possible LBJ destination, as the Brooklyn project seemed to be dying and Vince Carter was hogging up too much cap space to give the Nets the flexibility they needed to sign LeBron. Now the Brooklyn project has new life thanks to Prokhorov's money, and Vince Carter is in Orlando, sucking up their salary cap. The point is, the Nets are back in the LeBron James 2010 conversation.

In Phoenix, they are already proposing changes in the collective bargaining agreement to impose "superluxury" or "hyperbolic" luxury caps and "diamond" caps, hardened against the Russian missile, the richest owner in all of professional sports.

So why am I writing about it now? Two words. Mikhail Prokhorov. Prospective New Jersey Nets owner and Billionaire Mikhail Prokhorov now threatens the small nation of NBA and its facade of Fair Play. Mikhail Prokhorov, one of the 50 most wealthy people in the world, more wealthy than many countries and more wealthy than all NBA owners combined, poses a serious and downright un-American threat to the NBA. Billionaire Mikhail Prokhorov is so wealthy, he can pop millionaire NBA owners like zits. Adrian Wojaowski has already jumped on the implications - Mikhail Prokhorov can pop the luxury tax like a zit too.

Sounds like someone needs some ProActiv to go along with his Zanax. (And where were these guys when the Nets were poor? Oh wait, we still are.)

In Miami, the fear is of kidnapping…you know, a bad man offering an ingénue some bright, shiny sweets.

Q: Should we be worried about Mikhail Prokhorov? If he gets the approval to buy the Nets, he has more than enough to lure a Wade, LeBron or Bosh. Yikes. -- Justin.

A: Yup. He certainly would become an immediate player, just as Paul Allen became upon his arrival in Portland and Mark Cuban upon his arrival in Dallas. It is rare when Micky Arison doesn't hold the largest stack of chips at the table.

We find it all quite enjoyable reading. And the Phoenix blog artwork is to die for. It’s also amazing how one man can be portrayed so differently by fans of different teams.

Uncle Cliffy’s Revenge

In Washington County, Oregon, the other day, nine members of a burglary ring were sentenced to terms ranging from six months probation to 36 months in state prison. They had all pled guilty to repeatedly entering and ransacking the vacant home of Cliff Robinson who is currently helping out the Nets' big men in training camp…and who now lives in New Jersey.

Part of the court record was a letter Cliff and his wife sent the judge…

"No matter how much of our belongings have been recovered, the fact is they were taken, used and touched and kept in places we have no idea of," the letter said. "The very fact they would go into our twin baby boys' room and steal from them, shows how low these people are. They violated us on the most extreme level."

The thieves stole three all terrain vehicles, five bass guitars, a $1,200 Gucci purse and dozens of designer shoes. They boasted to each other, said the Oregonian, about their famous victim. One of the burglars even gave a friend Robinson's 1994 NBA basketball signed by his fellow all-stars.

Bad kharma will get you every time.

Final Note

Thankfully, this is the last off-season report of 2009. Why thankfully? Well, considering how wrong, dead wrong, we were last week, it’s best not to do this too often.

For those who didn’t read that report—and we hope that’s a lot of people, here’s what we said about the chances Prokhorov would buy the team.

Imagine, if you will, a secret plan to make the Nets the single wealthiest team in the NBA, vaulting them from their current penury. Now add in the possibility that this secret plan was hatched in Moscow!

Sounds too good to be true, and we have to agree. Indeed, Mikhail Prokhorov has a net worth that’s been estimated at anywhere between $10 and $15 billion (with a "b"). That makes him considerably wealthier than Mark Cuban and maybe even wealthier than Paul Allen. But it’s a long way from hope to reality.

First, this is a Nets’ proposition he’s considering, not the other way around. His spokesman has said that, publicly, on Russian television and to the Moscow print media. The spokesman gave no hint either way on what he’s likely to do. In spite of what Andrei Kirilenko has said, this doesn’t appear to be a done deal…at all.

It went down hill from there. So many apologies to AK-47, one of our favorite players, and to the richest owner in all of professional sports. That's richer than Paul Allen, Mark Cuban, Jerry Jones or Jerry Buss, George Steinbrenner or even the pre-Madoff Wilpons. We could go on.

Thanks for reading!