In its annual survey of the world’s 50 most valuable sports franchises, Forbes places the Nets at No. 38 at $2.5 billion. That suggests that Joe Tsai paid a premium for the Nets —and Barclays Center— a year ago when he slapped down between $3 and 3.5 billion for the team and arena (depending on which report you believed at the time.)
The survey appears to include the value of a team’s venue in its estimates, when appropriate. Down in the fine print, it details how the Nets/Barclays value dropped so precipitously between what Tsai paid and its current value.
“So while Tsai paid $3.3 billion for the Nets, we think the team is worth more like $2.5 billion because he paid around $1 billion for a money-losing arena business.”
But Tsai paid $3.3 billion for the team and arena. Norman Oder, critic and chronicler of the overall Atlantic Yards/Pacific Park project, texted Kurt Badenhausen, the Forbes author, with the question of whether he thought Tsai overpaid. Here’s how he responded...
“We believe Nets and rights to operate Barclays are worth less than what Joe Tsai paid.”
However, Tsai, responding to a NetsDaily Twitter post, had his his analysis...
The understanding of a deal from outside-in is never as good as that of the guy who did the deal. https://t.co/u3MPlaquPb— Joe Tsai (@joetsai1999) August 3, 2020
The survey does note in general that sports properties, particularly in large cities and in the NBA, have been rising ... despite the pandemic.
There are other confusing points in the survey. In its list, Forbes puts the Nets at the No. 6 slot in the NBA after the Knicks ($4.6 billion), the Lakers ($4.4 billion), Warriors ($4.3 billion), Celtics ($3.6 billion) and the Clippers ($2.6 billion). But in the story explaining the listings, Forbes writes this...
The NBA comes second with nine teams on the list, including three in the top five—the New York Knicks ($4.6 billion), the Los Angeles Lakers ($4.4 billion) and the Golden State Warriors ($4.3 billion)—with the Brooklyn Nets in hot pursuit after Alibaba billionaire Joe Tsai finalized a $3.3 billion deal for the franchise and operating rights to the Barclays Center last year.
No matter which number or ranking you use, the Nets rise in valuation is remarkable considering where they were a decade ago when Mikhail Prokhorov bought 80 percent of the team and 45 percent of the unbuilt arena for $220 million in cash and the assumption of $160 million in team debt. At that point, they were stuck in a limbo between New Jersey and Brooklyn, having just left what was considered the worst venue in pro sports —the Meadowlands— for one built for hockey in Newark.
The Nets are also the fourth most valued franchise in New York according to Forbes, after the Yankees, Knicks, Giants and Jets, but ahead of the Mets and all three area hockey teams, none of which made the top 50.
Forbes, citing the battle for the Mets, contend that despite the pandemic and associated issues, sports franchises remain highly valuable, quoting one sports broker as saying, “There is no lack of multi-billionaires that want to get into the sports business right now.” Ir also notes that “only one team in the top 35—MLB’s Los Angeles Dodgers, in 2012—has changed hands in the past decade,” (However, three teams between Nos. 36 and 40 did change hands, including the Nets and Clippers.)
At the time of the agreement between Tsai and Mikhail Prokhorov, just short of a year ago, there were disputes over how much the e-commerce billionaire paid and how the numbers broke down.
The New York Post’s Brian Lewis and Josh Kosman as well as Scott Soshnick, then of Bloomberg News, and Badenhausen of Forbes all offered their own estimates on the Nets price tag. The three reports differed somewhat with the Post pinning the price at $3 billion, Forbes at $3.3 billion and Bloomberg at around $3.5 billion. A league source involved in the transaction told NetsDaily at the time that the final price for the team and venue was $3.5 billion.
According to Lewis and Kosman, the arena was valued at $700 million in the larger transaction. Soshnick and Badenhausen do not break out the cost of the arena at the time.
As a team, not counting the arena, the Nets valuation back then was reportedly $2.35 billion. Tsai agreed to pay $1.15 billion for 49 percent of the team in October 2017, with an option to buy the remaining 51 percent for another $1.2 billion. Barclays was not part of that original agreement. Tsai’s net worth has jumped spectacularly since the October 2017 agreement, going from an estimated $8.8 billion then to $13.4 billion on Friday. He has also purchase the New York Liberty and other sports properties since then.
There are other questions regarding local valuations in the Forbes survey. While Badenhausen estimates the Knicks value at $4.6 billion, third overall, the current market cap — total dollar market value of a company’s outstanding shares— of parent company Madison Square Garden Sports (MSGS) is $3.7 billion —and that includes the Rangers as well as the Knicks. Since the pandemic, the newly formed company has seen its stock price plummet from $223 per share to $154 on Friday.
- The World’s Most Valuable Sports Teams 2020 - Kurt Badenhausen - Forbes
- So, Forbes thinks the Nets (and arena company) are worth less than what Tsai paid - Norman Oder - Atlantic Yards/Pacific Park Report