In retrospect, it was the deal of the century. In 2009, Mikhail Prokhorov, a swaggering Russian minerals oligarch out of favor with the Vladimir Putin regime, spent less than $400 million buying control of the moribund New Jersey Nets and a large share of Barclays Center, the new arena in the heart of Brooklyn that would be home to the NBA franchise. Based on the cost and value of the arena, we can probably consider Prokhorov’s purchase price for the Nets to be south of $200 million, maybe even cheaper.
Almost exactly a decade out from that purchase, the New York Post reports Prokhorov is completing his sale of the Nets franchise to junior partner Joseph Tsai for a total price of $2.35 billion.
We don’t know how much money Prokhorov invested in annual losses along the way, but the oligarch flipped an NBA franchise over the course of a decade for a net profit of more than $2 billion. Even if you assume he lost $100 million a year running the team — which is absurdly high, there’s basically no way he lost that much even with famously high player payrolls — he’d still be sitting on better than $1 billion in profit from the sale.
Tsai, a Taiwanese tech mogul, had bought 49 percent of the team a couple years ago for $1 billion with an option to buy the remaining 51 percent by 2021 for $1.35 billion. He pulled the trigger on that option early. The governor’s suite in Barclays must be real nice.
This sale now qualifies as the richest in NBA history, beating Tilman Fertitta’s $2.2 billion purchase of the Houston Rockets and Steve Ballmer’s $2 billion purchase of the Los Angeles Clippers. The Nets!
Even in a world where sports franchises have become some of the most valuable properties in the nation, that price for the Nets is unbelievable. It’s especially so considering the abject destruction Prokhorov wrought on the team during the most active years of his reign. Prokhorov’s story shows how there is no penalty for poor leadership for NBA franchisees, not at this point in the NBA’s history. Prokhorov’s story shows how timing and luck matter much more than competence. Prokhorov’s story shows how the NBA’s landmark labor deal in 2011 — following a short, but brutally efficient lockout — immediately vaulted franchise values and put the league in a whole new capital arena.
Prokhorov got into the NBA at the perfect time: right before the 2011 NBA lockout. Team values were still rising, but not skyrocketing. It was also, obviously, a critical moment for the BarclaysCenter and its associated Atlantic Yards project: costs were rising, investors had been crushed by the financial crisis, and delays were straining everything. Prokhorov was a knight (a BrooklyKnight, if you will) for outgoing Nets honcho Bruce Ratner.
Ratner technically and reportedly became one of two NBA franchise owners to lose money on a team, joining Bob Johnson, who paid $300 million to bring the Charlotte Bobcats into the NBA and sold the team for less than that to Michael Jordan less than a decade later.