The Russian economy is in shambles. It's headed towards recession, perhaps a deep one, as US and EU sanctions bite, the ruble is in free fall and western banks that used to float the oligarchs big loans are now reluctant to finance or even re-finance their loans.
But, in the case of Mikhail Prokhorov, his fortune remains stable, says Bloomberg. Why, because while other Russian investments drop, the value of the Brooklyn Nets and Barclays Center rise!
The commodities tycoon who ran against Vladimir Putin for president two years ago bought the Nets and their unfinished arena the Barclays Center for $223 million in 2010. Those assets are now valued at as much as $2.7 billion, meaning Prokhorov’s share could amount to as much as $1.8 billion.
That should ease the pain of seeing his personal fortune shrink by $2.5 billion this year
An simple sinkhole earlier month cost him and his ONEXIM holding company dearly, Bloomberg notes.
Uralkali, Prokhorov’s main Russian asset, declined about 28 percent this year, valuing the potash miner at about $5.9 billion. That’s about $1 billion more than Prokhorov paid for his 27.8 percent stake last year. While the company’s exports are benefiting from the ruble’s plunge, it risks losing about 20 percent of its capacity because of flooding at one of its mines.
Thank goodness for the Nets, says a sports business analyst. With the "new media deal and international growth prospects, the NBA is a very safe bet, particularly compared to certain Eastern European economies," said Chuck Baker of DLA Piper.
The crisis is far from over as a Newsweek report noted. Many of the oligarchs face a cash crisis. In fact, Lynnley Browning writes that Prokhorov was among a number of oligarchs invited to a December 19 holiday banquet at the Kremlin, hosted by Vladimir Putin. "The government will help business, but let business help the government," Putin was quoted by a Russian newspaper. In other words, explains Newsweek, the oligarchs will bail Russia out, and if they don’t, they’ll be tossed from their lucrative perches.
Will all this lead to Prokhorov selling the team? Not likely say the experts International Business Times spoke with. But they will need cash if Putin continues to squeeze them.
- Brooklyn Nets Give Prokhorov Assist as Tycoons Face Crisis - Yuliya Fedorinova & Alex Sazonov - Bloomberg News
- Russia's Rich Gets Richer—in Dollars—as Ruble Plunges - Lynnley Browning - Newsweek
Russian Sports Team Owners: Will Ruble Crisis Push Mikhail Prokhorov, Others To Sell? - Thomas Barrabi - International Business Times