Adrian Wojnarowski and Zach Lowe of ESPN, quoting league sources, report that Mikhail Prokhorov has agreed to sell 49 percent of the Brooklyn Nets —but not Barclays Center— to Joseph Tsai, co-founder of Chinese e-commerce company, Alibaba.
Prokhorov also agreed to give Tsai an option to buy a controlling interest in the the team starting in 2021, according to league sources who confirmed the basic tenets of the deal to NetsDaily. The Russian oligarch, who agreed to buy the Nets in 2009, will retain control of the team, including basketball operations, during the four years.
Woj and Lowe did not indicate when the sale agreement will be finalized, but Tsai will have to be approved as principal owner by the NBA Board of Governors. Tsai would join Prokhorov and Kings owner Vivek Ranadive as the only international owners of NBA teams.
The agreement is based on a valuation of $2.3 billion for the Nets, a record for an NBA team, Woj and Lowe report. Two months ago, the Rockets were purchased for $2.2 billion by Tillman Fertita, a Texas investor. The price tag for the Rockets also included a long term lease for the Toyota Center in Houston.
Tsai, 53, is a U.S.-educated investor who holds both Taiwanese and Canadian citizenship. He holds undergraduate and law degrees from Yale and went to high school in New Jersey at the tony Lawrenceville School.
With the addition of Taiwanese-American Jeremy Lin last season, the Nets are already extremely popular in Tsai’s homeland. Readership data compiled by NetsDaily show that more than five percent of our traffic come from Taiwan.
Tsai co-founded Alibaba, a Chinese e-commerce company, with Jack Ma, one of the world’s richest people. The company which has worldwide ambitions, is analogous to Amazon, with consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals. It also provides electronic payment services, a shopping search engine and data-centric cloud computing services.
The purchase is a personal investment by Tsai, a league source told NetsDaily rather than a corporate purchase by Alibaba.
Although Woj and Lowe broke the sale story, the New York Post’s Brian Lewis and Josh Kosman had been reporting on Tsai’s interest for weeks. Tsai had twice denied interest in buying all or part of the Nets.
Woj and Lowe report Tsai, who has a rich athletic background, has already met with Sean Marks and Kenny Atkinson and believes in their long-term plan for the Nets. The two have also been regularly briefed by Prokhorov on the progress of talks. The Nets owner has been in New York for a week, including at Wednesday’s win over the Cavaliers.
According to the ESPN reporters...
Tsai has expressed enthusiasm over the direction of the franchise with general manager Sean Marks and coach Kenny Atkinson, sources said, and ultimately plans to work on bridging his strong Asian business ties into global business opportunities for the Nets.
The two reporters note as well Tsai’s love of sports...
Tsai has a rich personal history with athletics, including his days as a high school lacrosse and football player at the Lawrenceville School in New Jersey. Tsai was an avid pick-up basketball player at Yale and has been a significant NBA fan for years. His business career has taken him from New York to Asia through the past three decades.
Forbes estimates his net worth at $8.8 billion, roughly the same as Prokhorov’s.
Prokhorov agreed to purchase the team in September 2009, ultimately taking control in May 2010. He paid Bruce Ratner and his investment group $223 million in cash for 80 percent of the team and 45 percent of the arena, then still under construction in Brooklyn. He also agreed to assume $160 million in team debt and cover $60 million in basketball operations costs. At the end of 2015, Prokhorov bought out Ratner and his investment group paying less than $300 million.
A $2.3 billion evaluation for the team alone represents more than a 10-fold increase in Prokhorov’s investment ... and the sale agreement permits Prokhorov to retain ownership in Barclays Center, which has a valuation of nearly $2 billion.
Prokhorov controls Brooklyn Sports & Entertainment, his U.S. sports holding company. In addition to his holdings in the Nets and the Long Island Nets, BS&E controls the newly renovated Nassau Coliseum and two smaller venues currently being rehabbed, the Paramount Theater in Brooklyn and Webster Hall in Manhattan. Prokhorov also financed the Nets’ $52 million HSS Training Center. Brett Yormark, CEO of BS&E, said last week that the company may be interested in expanding operations to London as well.
Working with Yormark, team chairman Dmitry Razumov and his New York rep, Irina Pavlova, Prokhorov succeeded in moving the Nets first from IZOD Center in the Meadowlands to the Prudential Center in Newark, then in 2012 to Barclays Center. The move is, at least as of now, the signature accomplishment of his ownership.
As Woj and Lowe report, the team has never made a profit in Brooklyn (although Barclays Center has been modestly profitable.) The the Nets lost $144 million on basketball-related activities in 2013-14, the largest such figure in the league that season by more than $100 million.
Most of that loss was due to luxury tax payments for a roster that included Paul Pierce, Kevin Garnett, Deron Williams, etc. Since then, the team’s balance sheet has improved, but still, as ESPN reports, Brooklyn lost almost $23.5 million last season, the second-largest loss among all teams, ahead of only the Detroit Pistons.
The shortfall in recent years has been more a revenue issue than an expenditure issue. The Nets pulled in $36 million in net local revenue last season -- also the lowest such figure in the league, Woj and Lowe report.
This will be Tsai’s second purchase of an American sports franchise. He paid $5 million this summer to acquire the San Diego expansion team in the National Lacrosse League.
- Joseph Tsai agrees to purchase 49 percent minority stake in Nets, sources say - Adrian Wojnarowski & Zach Lowe - ESPN
- Alibaba Co-Founder Joseph Tsai Said to Buy Brooklyn Nets Stake - Michael J. De La Merced & Joe Drape - New York Times
- Alibaba’s Joe Tsai Purchases Brooklyn Nets in $2.3 Billion Deal - Scott Soshnick - Bloomberg News
- E-commerce mogul agrees to buy big Nets stake - Brian Lewis - New York Post
- Nets owner Mikhail Prokhorov agrees to sell 49 percent minority stake in team to Joseph Tsai: report - Jake Becker - New York Daily News
- Report: Prokhorov sells 49 percent of Nets to Joseph Tsai - Newsday
- Alibaba's Tsai in deal for stake in NBA's Brooklyn Nets - Liana B. Baker & Jessica Toonkel - Reuters
- Alibaba co-founder Joseph Tsai to buy 49 per cent of Brooklyn Nets - Nicolas Atkin - South China Morning Post
- Report: Alibaba co-founder Joseph Tsai to purchase 49 percent of Brooklyn Nets - Ben Rohrbach - Yahoo! Sports
- Report: Nets sell 49 percent stake to Alibaba co-founder, team valued at $2.3B - Chris Barnewall - CBS Sports
- Report: Alibaba Founder Joseph Tsai Agrees to Buy 49% of Nets - Stanley Kay - Sports Illustrated
- The Brooklyn Nets’ ownership shake-up, explained - Tom Ziller - SB Nation
- Mikhail Prokhorov Reportedly Sells Minority Stake in Nets to Joseph Tsai - Tim Daniels - Bleacher Report
- WHO IS JOSEPH TSAI AND WHY IS HE BUYING INTO THE NETS? - Mark Dreyer - China Sports Insider
- Nets' 49% share said to be sold, with overall valuation at record $2.3B - Norman Oder - Atlantic Yards/Pacific Park Report