In a story on Mikhail Prokhorov's tenure as Nets owner, Dmitry Razumov tells Forbes Russia that ownership realized early on that the team had to be treated as a "start-up" -- meaning "built up from the bottom" and quickly. So, like Silicon Valley angels, they provided the cash infusion.
Also in the same story, an unnamed "friend" of the Nets owner says Prokhorov doesn't blame anyone for the lack of success on the court, but "he has some negative feelings for certain players and their level of motivation." Neither the friend nor Forbes identifies the players in question.
According to Razumov, the team's chairman, raising the profile of the team through big investments in the team and and an aggressive marketing campaign was a "conscious decision" early on..
"At its core, the Brooklyn Nets basketball operations and business model is a startup, and we built it up from the bottom," says Razumov, who works closely with Billy King. "Considering the size of the market and the level of competition, we needed to make some big investments. At a certain point, we made the decision to sacrifice operational profit in favor of increasing the team’s market capitalization."
Thus, ownership's willingness to eat the team's losses, which skyrocketed to $144 million in 2014, while watching the team's valuation, or market capitalization, proved correct at least off the court. The team's value, without the arena, rise to $1.5 billion, according to Forbes' latest estimate.
Razumov adds that despite the decision to go for value over profit, revenues of the Brooklyn Nets have grown 91% since Prokhorov became owner in May 2010 Sales of in-arena merchandise have increased 320% per capita and attendance has grown from 69 percent of capacity their last year in Newark to 94 percent.
In addition to revenues from ticket sales and events, Forbes notes Barclays Center receives money for naming rights from the Barclays British banking group, with a 20 year contract estimated at 400 million dollars.
"They overpaid for Garnett and Pierce," admits Prokhorov's unnamed friend. "But those players raised the club’s popularity. The performance wasn’t ideal, but the team still made it to the playoffs. Mikhail doesn’t blame anyone. He has some negative feelings for certain players and their level of motivation, but the positive of the club’s increasing value is more important to him."
Also quoted in the story is a well-known Russian basketball commentator Vladimir Gomelsky who blames the Nets disappointments on "team management," without naming names. He cited the Boston trade as an example.
Meanwhile, on another issue related to the team's valuaton, Prokhorov and Bruce Ratner, lead partner in the group that owns 20 percent of the team, agreed to postpone, for the second time, a deadline for Ratner's parent company to pay Prokhorov $31.3 million. Ratner's group hasn't paid its share of the team's losses since the Nets first year in Brooklyn. According to filings with the Securities and Exchange Commission, unless the debt is resolved, Ratner's stake in the team will drop from 20 percent to eight percent.
Forest City Enterprises Inc. enters overtime period in deciding fate of stake in Brooklyn Nets - Scott Suttell - Crain's Cleveland Business