There are the facile comparisons one can make between Mikhail Prokhorov and Joe Tsai. One is Russian, the other Taiwanese (or Canadian, whatever suits you.) One made his fortune in the most basic of industries, mining; the other in tech, specifically Alibaba, the China-based e-commerce giant.
One is the product of an emerging Russia, the other of a greater world view, with many links to the United States. Prokhorov appears to be the more playful ... unmarried with a reputation as a rake; Tsai the more serious, married with three children. Prokhorov says he eschews even the most basic tech, the cell phone, while Tsai can wax on about artificial intelligence.
Prokhorov bought the Nets after owning Europe’s top basketball team, CSKA Moscow, for a decade and at one point or another looked at buying the Grizzlies and the Knicks. Tsai’s only sports venture was the recent purchase, at $5 million, of the San Diego Seals of the National Lacrosse League.
Bottom line though (it’s where things have to start and finish), both are worth somewhere around $10 billion, which puts them in the top two or three of NBA owners. Prokhorov’s net worth has declined, some might say dramatically, over the past five years, while Tsai’s has jumped, also dramatically, over that period. For the record, Forbes ranks Tsai as the world’s 171st richest person; Prokhorov at 176. Bloomberg has the rank reversed, with Prokhorov at 123, Tsai at 128.
Tsai, of course, won’t take over the Nets until 2021-22, it appears from published reports. In the interim, it’s still Prokhorov’s ball. Tsai’s role during that time is less defined, at least for now. He will own 49 percent, but don’t expect someone of his ambition and aggressiveness to be nothing more than a passive investor.
So what else can we learn about the 52-year-old Tsai from his public persona? First of all, he’s a fan of the game. He played pick-up basketball at Yale, where he has degrees in economics and law, and presumably the Lawrenceville School, the tony prep school and Ivy League incubator between Princeton and Trenton. He played lacrosse at Yale; lacrosse and football at Lawrence. So he, like Prokhorov, is (or was) a jock.
According to expat reporter Mark Dreyer of China Sports Insider, he was also instrumental in bringing the Pac-12 to China (now in its third year) and served as the main host for the visit of the Harvard and Stanford teams to the Alibaba campus last year.
Tsai is quite familiar with New York. Between 1977, when his parents sent him to Lawrenceville, through his college and law schools years and then a stint at Sullivan and Cromwell, known in legal circles as the whitest of the “white shoe” New York firms, Tsai spent nearly two decades in and around the city. His English is impeccable, American accented. He holds a Canadian passport as well as a Taiwanese.
He began investing in his late 20’s working specifically for Investor AB, the holding company of Sweden’s richest family, the Wallenbergs. By 1996, as China boomed, he decided to head back across the Pacific to Hong Kong where he currently has his main residence. Before he left the U.S., he married a Taiwanese woman who was also working in finance in the U.S. ... and has degrees from Stanford and Harvard. The ceremony took place at Park Avenue Christian Church in New York. She is the daughter of a former mayor of Taipei, Taiwan’s capital city, he the son of one of the partners in the country’s top law firms. Taiwanese royalty, so to speak.
Three years later, he and Jack Ma, a Chinese tech entrepreneur compared to Steve Jobs, set up Alibaba, now an e-commerce giant. Bigger than Wal-Mart, a challenger to Amazon now, but then, a big bet. According to company legend, Tsai left his $700,000 a year job in New York for a $50 (not a typo) job in Ma’s apartment building Alibaba.
Although there were more than a dozen co-founders, Tsai has the second biggest holdings in the company, after Ma, the company’s mercurial founder and front man. He is also listed as executive vice-chairman, right behind Ma, whose title is executive chairman. Tsai (and Ma) had their big payday when Alibaba (trading as BABA) went public in 2014. Valuation of the company soared and their personal wealth rose to 11 figures.
The cash flow also permitted Alibaba to go on a buying binge, everything from cell phone companies to sports rights to Hong Kong’s leading newspaper. Tsai directed most of it as the company’s long-time chief financial officer who was in charge of strategic acquisitions and investments.
Tsai also set up a family investment office, Blue Pool Capital. The investment funds needed to buy into the Nets will reportedly come from Blue Pool, not Alibaba. A league source insists this is a personal purchase not a corporate investment. There’s also a family foundation based in San Diego one of several places Tsai has residences. The Joe and Clara Tsai Foundation has focused on educational issues.
There have been controversies. One of Alibaba’s companies, Taobao, has been accused by the U.S. Office of the Trade Representative of being a “notorious” market for counterfeit items (including NBA and even Nets gear!) The Chinese online shopping website is similar to eBay, Amazon and Rakuten, just bigger. And there is concern that the company’s purchase of the South China Morning Post will limit the Hong Kong paper’s criticism of Beijing.
And what about the multiple denials to the New York Post and Reuters that he was interested in buying a piece of the Nets? Take a look at this denial from an Alibaba spokesman on October 5.
Alibaba Statement “This is false. Joe Tsai has never talked to the seller and he is not purchasing any stake in the Brooklyn Nets.”— Sally Shin (@sallyshin) October 5, 2017
That’s not something local reporters will easily forget.
So what can we expect from Tsai as minority owner, then owner. Tsai is smart, aggressive and very, very much into using every digital advantage he can find for his ventures. He might very well spend his initial efforts on the business side of the franchise. The Nets were dead last in net local revenue last season, meaning things like ticket sales, sponsorships and local TV rights. The team has never made a profit in Brooklyn and its last two owners in New Jersey, Bruce Ratner nor the Lewis Katz/Raymond Chambers partnership, also piled up losses.
This is what he said recently about how artificial intelligence is deeply ingrained in everything Alibaba does.
“AI is not something we woke up one day and decided we need to invest in,” he told an audience of journalists earlier this year. “AI is something that has always permeated throughout parts of our operations.
“If you look at the Alibaba eco-system, we're doing online shopping, we're delivering packages to people, we're doing payment, entertainment, All the things that we do creates so many different use cases to apply AI technology.”
In general, he told another technology summit, businesses must view data as a nutrient, “food for the machine.”
As for basketball operations, Adrian Wojnarowski and Zach Lowe wrote on Friday that Tsai has “expressed enthusiasm” over the direction of the franchise with general manager Sean Marks and coach Kenny Atkinson. Prokhorov also kept Marks and Atkinson abreast of latest developments, according to league sources.
Does he know Jeremy Lin, a son of Taiwan immigrants who every summer flies to Taiwan to meet his fans, give testimony and play some pick-up games. No one has yet said, but as the Post reported, Tsai has invested in Choxue.com, “which is run by Lin’s Harvard roommate and Bible study partner Cheng Ho.”
So what’s the next step? The NBA will have to approve Tsai as an owner, but it’s hard to believe that Adam Silver didn’t have advance warning of the deal. Also, there is some question about how Chinese authorities will look at such a big overseas investment, considering their new currency restrictions. Again, it’s hard to believe that hurdle hasn’t been pre-cleared. (And Tsai isn’t a Chinese national. He holds Canadian and Taiwanese passports and residency in San Diego.)
So, just as we did in 2009, when a Russian playboy investor appeared on the scene to save the day —and move the team to Brooklyn, we’ll wait for the first press conference, the first interviews, to see what Tsai says about his plans. We’ve been through worse.