NetsDaily Off-Season Report No. 20

There's only two and a half weeks left in the off-season. September 28, Media Day, starts the preseason.  So, we will have an off-season report this weekend and the next two.  Then, we return to regular programming.  Savor them while you can.  Of course, once preseason begins, there will be a lot more news. Beat writers will be at practices Players, coaches and front office types will be available for questioning.

Everyone all-in?

Most of the 18 roster players are in town, working out at the training facility, participating in scrimmages and getting their pictures taken. Word is that everyone is in good shape --no DeShawn Stevenson showing up 35 pounds overweight-- and the group is hungry.

Bojan Bogdanovic and Andrea Bargnani are still in France, where their national teams are now in the round of 16 in Eurobasket.  One loss and they could be joining their teammates in East Rutherford.  The round of 16 is a knockout round.  Both should win their first games Sunday vs. the Czech Republic (Croatia) and Israel (Italy), but after that, it gets tougher and teams like Serbia, Spain and France loom large. IF either make it to the Finals, they would still be playing next weekend and have only a week to return home, pack, rest a little and get back to New York for Media Day on September 28.

As for injuries, Chris McCullough's long-term status remains a mystery, but he won't be practicing with the team in camp, although he will be there, working out. Thomas Robinson has been scrimmaging.  We don't know what Sergey Karasev's situation is.  He was expected to be ready for full contact by the opening of training camp. No indication that's changed. This is a big camp for him. By October 31, the Nets have to decide whether to keep him for a fourth year in 2016-17, at a cost of around $2.5 million.

The team is the NBA's 10th youngest and around the same in terms of experience. As we've noted before, that's a big change from the three previous Brooklyn teams. With so many non and partial guarantees, rookie deals and vets minimums or their equivalents, the group should be hungry. There are six players on non-guaranteed or partially guaranteed deals --second most in the NBA-- and four with player options next season. Of course, there are three more players than roster spots. So, a lot of money is at stake, specifically $4.3 million in yet guaranteed money, from $1.5 million for Dahntay Jones to $450,000 for Ryan Boatright.

Expectations, as Ian Eagle was heard to say last weekend, are not what they have been. We know this. We read ESPN. But all of that is on paper ... or online. We still have 50 days before we see what they can do once the ball goes up. We can wait.

How soon a sale?

After the Post and Daily News reported that Mikhail Prokhorov could soon buy out Bruce Ratner --and his partners' stakes --in both the team and arena, there's going to be speculation how soon.  So we're joining in.  Without getting into all the details of a potential deal, know this: Ratner and his parent company, Forest City Enterprises, would like a deal done soon.

As Brad Thomas wrote in Forbes this week, there are two issues a sale would solve for FCE.  One has been discussed before, FCE's decision to go from a pure public company to a real estate investment trust, which is more restrictive in terms of what assets can be included in the corporate portfolio.  At the top of the list of assets that they want to dump are a basketball team and an arena. There is a deadline as well for that REIT conversion: January 1.

Thomas wrote, "As Forest City has suggested the company has been 'transforming by focusing on core products and strong urban markets, improving the balance sheet and debt metrics'."  Basketball is not a core product.  Nor is it what Forest City thought it would be. Thomas again: "Although the development partners intended for the Nets to become a cash cow that would spur surrounding development, it has turned into more of a loss leader."

The other issue, not so well known, is that Forest City through its partners in Nets Sports & Entertainment, Ratner's investment vehicle, owe a lot of debt on the team and arena. Try hundreds of millions of dollars. Thomas notes how selling the interests in the team and arena will clear up a lot of that, as would the other sales they are contemplating in light of the REIT conversion.

"The biggest benefit for Forest City investors though would be debt reduction," Thomas writes. "By selling the Nets and the other related non-core assets the company could shift up to $625 million off the balance sheet while improving operating margins with a cost savings of around $40 million in 2017."

As an analyst quoted by Thomas notes, that could add value to the stock, which has been stuck in the mid-20's for a long time, never a good thing.

There are benefits for Prokhorov, of course, as Thomas writes. "Combining the b-ball team and the real estate would make sense for the Russian billionaire, since he would have full control and that would allow him to sell-off 100% of the team or 100% of the real estate."

There's also value to be had if the Russians want to sell only a minority stake. By cutting costs (like Deron Williams contract), the Nets could be profitable this year, and certainly will be profitable next year when the big TV rights deal starts pouring cash into team coffers. In the past, a prospective minority ownership stake would not have looked very tempting.  What would an investor group get in return for an investment of many hundreds of millions of dollars? No control and the privilege, as one writer noted, of eating their share of the team's losses.

Will they sell?  We still hear that their interest lies, at least for now, in dumping a minority stake and reaping a big profit on their minimal investments. Anyone who has ever sat (or stood) with Prokhorov or Dmitry Razumov knows they are psychically invested in the team.  It's a lot more fun than mining potash. And Prokhorov seems to be changing his business model at home. With Russian government currency restrictions, the declining value of the ruble and U. S. financial sanctions, investments may be the smarter route to go rather than just accumulating cash.  We shall see.

Now, as to when does the deal go down?  We predict between now and September 29, when the Nets starting training camp at Duke. That's also the day before the end of the third quarter for Forest City.  Always good to announce earnings positives in the quarterly report.

The good doctor

We found one small part of former Jazz team physician Dr. Lyle Mason's interview with Salt City Hoops particularly  intriguing.  Despite saying he and Deron Williams are still friendly (!), the good doctor basically torched him, saying he dissed Hall of Fame coach Jerry Sloan and suggested he was damaged goods physically, even before the Nets traded for him. In that context, here's the line that interested us.

"Nobody ever figured the wrist out. We knew he had loose ankles. And then those just got worse, I think, at least more symptomatic when he went to New Jersey."

Put aside the "loose ankles" reference.  "Nobody ever figured the wrist out?"  That's not what we heard and what was reported back in 2011.  D-Will said he had been told by Jazz doctors --Dr. Mason?-- that the wrist pain he was suffering would clear up only with rest.  It hindered his shooting in those early days in New Jersey..

But what happened, according to reports at the time, was Jazz doctors had essentially misdiagnosed D-Will's wrist injury. It wasn't about rest.  When as the season went on, there was no improvement in Williams' wrist pain, the Nets decided to do a finer slice MRI than the Jazz had .done .. and found the bone chips that were the source of the problem. Instead of rest, D-Will's wrist required surgery.

The interview, in general, seemed odd.  We can't imagine Dr. Riley Williams, the Nets medical director or Dr. Michael Farber, the team physician, doing that now or after retiring.  And Williams and Farber have great reputations. Ask Paul George about Dr. Williams and Mirza Teletovic about Dr. Farber. The former helped save a career, the latter, along with Tim Walsh, helped save a life.

Juan Pablo Vaulet update

Speaking of injuries. As we reported, he underwent surgery in August for a stress fracture in his tibia, near his ankle. He won't be back playing for Bahia Basket in Argentina till around December. In a picture posted on his instagram account this week, the 19-year-old Nets pick wasn't wearing a walking boot. That would be the first time we've seen him without a boot since he suffered the injury in July.  That's progress. The Nets medical and training staff are working with the Bahia Basket staff on a rehab regimen.

Olympics, anyone?

Also, with Argentina now guaranteed a spot in the Olympics, Nets fans might see Juan Pablo, a 6'6" shooting guard, during NBC Sports coverage of the Rio de Janiero games next summer.

Nothing is yet guaranteed for the Nets' two other international players, Bojan Bogdanovic of Croatia and Andrea Bargnani of Italy.  And there's no indication any of the U.S. citizens on the Brooklyn roster will be playing for the red, white and blue.  (Deron Williams is the only Nets player to win an Olympic gold while on the team.  Sergey Karasev, the youngest Olympic basketball player in London three years ago, has a bronze. There's virtually no chance Russia makes the cut for Rio).

Dahntay's the name  ... toughness is his game

Dahntay Jones seems like such a nice man, but his reputation is a tough guy.  There was this incident in the Western Conference series between his Clippers and the eventual world champion Warriors.