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Bloomberg backs off report that Tsai got spending protection in Nets deal

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CNBC

Bloomberg News on Friday backed off an earlier report that stated Joe Tsai got Mikhail Prokhorov to cover losses related to lavish player contracts as part of his agreement to buy a 49 percent stake in the Nets.

Bloomberg’s Scott Soshnick initially reported that Joe Tsai, who’s agreed to pay $1.1 billion for a 49 percent stake in the Nets, has set up an “insurance policy” that should prevent Mikhail Prokhorov from partying like it’s 2013, when the Nets set an NBA record for spending ... and financial losses.

A Nets insider strongly denied the report to NetsDaily. Not long after, the story was changed.

Soshnick’s first report stated...

Joe Tsai put an unusual condition on his investment: He’s refused to cover any losses related to player salaries, according to people familiar with the sale contract.

Later the story changed.

Before buying into the Brooklyn Nets, billionaire Joe Tsai discussed putting an unusual condition to his investment: a refusal to cover any losses related to player salaries, according to people familiar with the sale contract...

That language never made it into the final contract, though Tsai does have other downside protection, said to the people, who asked not to be identified because the talks were private. The Nets declined to comment. Tsai didn’t return emails seeking comment on the provision.

The “downside protection” wasn’t further described.

Even if the details in the story were true, the Nets are nowhere near the league’s spending limits. As Soshnick notes, the Nets’ 2017-18 payroll is a “modest $95 million,” 24th in the league, and $24 million under the current luxury tax threshold.