Q. and A. on Brooklyn Nets and Los Angeles Dodgers combination

Today's NetsDaily exclusive on the Nets and Dodgers owners looking at a "combination of assets" raises a lot of questions.  The report, based on conversations with multiple sources, is the just the first of many as the two sides try to work out a deal.

We don't pretend to know all the answers, but here's our best effort.

Q. Will Mikhail Prokhorov still be principal owner of the Nets?

A. Sources tell NetsDaily that Prokhorov will remain as "governor and controlling owner" of the Nets. That phase is NBA language for principal owner, the lead decision-maker.  He will remain so, said one source familiar with the talks, "for the foreseeable future."  That would tend to suggest he is not looking to change anything about his role anytime soon.  That's what "foreseeable" implies. Prokhorov said the same source, is heavily engaged with the basketball side of the Nets, is still emotionally connected and is optimistic about the team's chances this year.

Moreover, another source reports that Dmitry Razumov, the Nets chairman, and Irina Pavlova, president of ONEXIM Sport and Entertainment, will likely continue to be in charge of the basketball and business sides, respectively.  The Nets front office, at least at the highest levels, has been aware of the talks. In other words, don't expect much change in team management.

Similarly, Bruce Ratner will continue to control Barclays Center.

So many people have been invested in the idea that Prokhorov was looking to sell the team that they still assume the team is for sale, but there's no indication that is the case. In fact, you can make the argument that if Prokhorov wanted to sell, he could have sold to Guggenheim ... or another investor. Instead, he chose another route to maximizing his assets.

Q. What about reports from Adrian Wojnarowski and Chris Mannix that this could eventually become a sale?

No confirmation from our sources that is correct, at least in the short term, aka the "foreseeable future," but it certainly wouldn't be a surprise if Guggenheim gets a right of first refusal to buy the team if Prokhorov decides to sell. Is that two years, three years, six years?

On the other hand, a partnership like this would provide Prokhorov with an interest in two major US sports franchises in the nation's two biggest markets, the Nets in New York and the Dodgers in Los Angeles.  He may want to expand his sports holdings, rather reduce them.  Prokhorov is currently renovating Moscow's oldest sports stadium, the Streltsov Torpedo Stadium, into a covered sports stadium. He also has an interest in the Nassau Coliseum rehab project.

Q. What about Darren Rovell's report that the Nets are listening to offers from other investors?

It's possible, even likely, that Prokhorov is looking to gauge the value of the franchise for any one of a number of reasons. But it should be noted that the most recent talks, as best we can tell, were those in Moscow on Monday. Moreover, that meeting involved not just Prokhorov and Todd Boehly, president of Guggenheim Partners, but also Bruce Ratner and Brett Yormark.

Q. Why do this now?

A. Following the sale of the Los Angeles Clippers to Steve Ballmer for $2 billion and the lowly Milwaukee Bucks to Marc Lasry and Wes Edins for $550 million, the valuation of NBA franchises has risen dramatically.  Prokhorov can see the value of "parlaying" that rise in valuation into cash and/or new opportunities, as one source described it. In May 2010, he paid $223 million in cash, assumed $180 million in debt (which he refinanced) and agreed to eat $60 million in losses while the Nets were in New Jersey in return for 80 percent of the team and 45 percent of the arena (as well as an option to buy 20 percent of Atlantic Yards, an option he never exercised.)  The value of that investment has now grown nearly 1,000 percent -- for purposes of the talks with Guggenheim, the team is now valued at $1.7 billion and Barclays at $1.1 billion.

The Nets, playing in the biggest market, in the NBA's newest arena, are a hot NBA property. And, the NBA's new TV rights deal could increase the valuations of all NBA teams, although some suggest that is already priced in to the price tag.

Q. Does Prokhorov need the money?

Need? No. Want? It's how he operates. In 2008, he was forced out of Norilsk Nickel but wound up with $7 billion in cash just as the Great Recession was hitting. He bought a number of distressed assets, including the Nets, for pennies on the dollar and built them up, the Nets being his most successful investment.  Last year, he sold his entire 38 percent stake in Polyus Gold for $3.6 billion, also in cash. He used part of that to buy a controlling stake in the world's largest miner of potash, a natural fertilizer.

His biggest asset is probably the one-sixth stake in RusAl, the world's largest aluminum company. That stake has nearly doubled since this time last year.

Q. What is Guggenheim Sports and Entertainment Assets?

A. GSEA is an affiliate of Guggenheim Partners, a global investment and advisory financial services firm that engages in investment banking, capital markets services, investment management, and investment advisory. The firm is headquartered in New York City and Chicago with over 2,500 staff located in 20 cities throughout the United States, Europe, and Asia.

Over the past several years, Guggenheim has made a big move into sports and entertainment assets. In addition to the Dodgers, which they bought in 2013 for $2.15 billion in cash, they own Dodgers Stadium and the surrounding real estate; the WNBA Los Angeles Sparks; a piece of Dick Clark Productions, which produces specials such as the American Music Awards, the Golden Globe Awards and other television programming. It also bought several trade publications, including the Hollywood Reporter.

Guggenheim had some high profile partners in those acquisitions, including Magic Johnson, producer Peter Guber and former baseball executive Stan Kasten, among others. It's possible that like Guggenheim Baseball Management, Guggenheim Sports and Entertainment Assets could have other partners.  Might there be a role for Magic Johnson with the Nets. Primary source was unaware of any.

Q. What's meant by a "combination of assets?"

A. Not a lot of detail here, but the phrase suggests that the Nets assets and the Guggenheim assets will be combines into a larger entity, perhaps a partnership, with each side owning a certain percentage, but with each side retaining separate management of its assets.

One source estimates the combination could have a total valuation of as much as $8 billion dollars.  It would also put  the partnership in position to make other sports and entertainment assets.

It's possible for example that Bruce Ratner's rehabbed Nassau Coliseum could fit into such a partnership.  It's been reported that Prokhorov's ONEXIM Sports and Entertainment is an investor in the Coliseum and that Guggenheim will help finance the $229 million project. it's expected to get underway after the Islanders complete their season.

Who might run this partnership? The presence of Brett Yormark, CEO of the Nets and Barclays Center, at the discussions in Moscow this week could be a hint.  He is very well regarded in the sports and entertainment community.

Q. Would there be a cash exchange or exchange of assets?

We're told that's still to be determined but it would be both and it could be complicated.  The Nets and Yankees tried this twenty years ago and it was a disaster -- other than for those owners who also invested in YES.

Q. How soon might this deal go through ... if it goes through?

A. Is it imminent? Probably not.  If  you look at the complicated deal that brought the Nets under Prokhorov's control, that might give you a hint of how long it could take. Ratner first met with Prokhorov in late July 2009. By September 23, 2009, the two sides had an agreement in principal. It took another eight months to finalize the deal, but that deal was complicated by eminent domain issues.