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Joe Tsai: Why buying the Nets —and not the Rockets— was an easy call

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In an interview with US Lacrosse Magazine, Joe Tsai said that while many aspects of owning the Nets excited him, the biggest appeal was the simple joy of the game.

And he admits he prefers New York over Houston!

“Here’s the thing: financially, it made sense. Business-wise, it’s very interesting,” Tsai, the Nets minority owner, told Paul Carcaterra in the interview which was published Tuesday, “But at the end of the day, there’s nothing better than having the joy of going to games. I love going to basketball games. My family loves it. My kids love it. It’s just great. Right now, we’re sitting here in Barclays Center, about to see a game.”

The price for that joy, of course, was steep. He purchased 49 percent of the Nets a year ago for more than a billion dollars and has an option to purchase control in 2021 (with one report suggesting transfer of control could be moved up.)

Tsai, in his first US interview since buying the team, also disclosed that he and his group looked at the Houston Rockets during the Nets discussions but he ultimately went with the Nets because of his love for New York.

“At the same time, the Nets were up for sale and back then, the owners of the Houston Rockets also put the team up for sale. We sort of thought about it but we decided to put the focus on the Nets because I just couldn’t imagine myself spending too much in Houston. No knock on Houston, but I love New York and owning a sports team, especially in a major league like the NBA, it’s like owning a nice apartment on Park Avenue. The value’s not going to go down!”

Tillman Fertita, the restaurateur, ultimately bought the Rockets for $2 million.

The interview was focused on Tsai’s interest in lacrosse. He played the game at Lawrenceville School in New Jersey and at Yale and owns the San Diego Seals of the National Lacrosse League. But the 55-year-old Taiwanese-Canadian businessman spoke at length about how he wound up as Mikhail Prokhorov’s partner in Brooklyn.

“I came into the ownership of sports teams in a serendipitous way,” said Tsai. “Two years ago when the Brooklyn Nets were for sale.

“We were contacted by the seller’s bankers (Allen & Co.). I really didn’t treat the opportunity too seriously at the beginning. We have a group of people in our family office and I said to them, ‘let’s sign the NDA (non disclosure agreement), get the materials. Let’s give it a look. see what we have.’”

Tsai said the big selling point was the manner in which the NBA distributes its revenues, both between owners and players and among the owners themselves. In addition to owning a team, Tsai would own 1/30th of the NBA.

“So, as we peeled through the materials, the more we kind of looked at it —this is really more specific to the NBA — the NBA is really interesting from a business standpoint.

“You have a very good system to share the economics between the owners and the players. The players are very, very important. In any sport, without the talent, the players, you’re not going to have a good team and you’re not going to have fans. So they’re very very important. So in the NBA, there’s a very fair share of the economics between the players and the owners. That’s one thing.

“The other thing is among the owners, there’s a very good system for sharing the economics at league level. So, for example, the TV broadcast revenues nationally are shared equally 30 teams. So in a way its kind of a socialist system,” he joked.

It isn’t that way in every pro sport, Tsai argued.

“I was comparing that to European soccer. If you buy a team in the English Premier League, for example, the top few teams that are always winning, they’ll just get better and better because they get more of the economics. They can afford to pay the players.”

Tsai, who’s co-founder and executive vice-chairman of Chinese e-commerce giant Alibaba, added he sees the NBA’s global reach growing and not just in China. He specifically mentioned the Philippines, Indonesia and Mexico as markets where there’s growth potential.

“From a business standpoint, it made a lot of sense. Then, I was looking at the upside. The NBA and basketball is a very, very big sport globally. Everywhere, people love the NBA, especially in China. I was seeing how the people loved the sport in China. Also, in South East Asia, in the Philippines, they love basketball. Indonesia. Even Mexico. That’s going to be a big market. So there’s a lot of international expansion opportunities. So it all made sense.”

In talking about his personal sports history, Tsai noted he played lacrosse and football at Lawrenceville as well as lacrosse at Yale (last year’s NCAA champion.) There’s even some archival video.

When Carcaterra asked whether Tsai who has residences in LaJolla, California, and Hong Kong, gets a chance to watch his alma mater, Tsai responded, “I watch every game.”