Prokhorov Said to Explore Sale of Basketball’s Brooklyn NetsScott Soshnick
The Brooklyn Nets are for sale.
Russian billionaire Mikhail Prokhorov retained Evercore Partners to sell the National Basketball Association team he bought in 2010, according to two people with direct knowledge of the matter.
The people requested anonymity because the matter is private.
Nets spokesman Barry Baum declined immediate comment. Dana Gorman, a spokesman for Evercore with The Abernathy MacGregor Group, declined to comment.
“As we have been saying for many months, team ownership is open to listening to offers,” said Ellen Pinchuk, a spokeswoman for Prokhorov. “That’s just part of the business. There is nothing imminent in terms of the sale of any stake in the team.”
Prokhorov, 49, the first foreign owner of an NBA team, holds 80 percent of the club and 45 percent of the Barclays Center, its 2 1/2-year-old arena which next season will house hockey’s New York Islanders. Only the team is for sale, the people said.
“It’s a unique asset which is going to garner national and international interest,” said Sal Galatioto, founder of New York-based advisory firm Galatioto Sports Partners, which has sold NBA teams including the Philadelphia 76ers and Phoenix Suns.
Galatioto declined to put a price tag on the team, which valuations expert Peter Schwartz said is worth about $1.3 billion. The arena is worth even more, said Schwartz, a managing director at Boston-based Christie & Associates, adding that the commodity tycoon’s combined stake is worth about $2 billion.
Because of their home in the No. 1 U.S. media market, and the infrequency with which marquee franchises become available, the Nets might fetch more than the record $2 billion former Microsoft Corp. Chief Executive Officer Steve Ballmer paid for the Los Angeles Clippers in a frenzied auction sparked by racist comments made by former owner Donald Sterling, Schwartz said.
“The fever of a trophy asset goes beyond financial analysis -- as we saw in Los Angeles,” Schwartz said.
Bruce Ratner, a limited partner in the Nets and the majority stakeholder in the arena, previously hired Evercore to explore a sale of his 20 percent stake in the team. No agreement was reached as it’s difficult to find someone willing to pay hundreds of millions of dollars without getting a say in operations. Guggenheim Sports and Entertainment, which paid a U.S. sports record $2.15 billion for Major League Baseball’s Los Angeles Dodgers and their stadium, previously held talks with Prokhorov that didn’t yield an agreement.
Forbes said about a year ago that the Nets were worth $780 million, fifth in the 30-team NBA. That estimate was made before Ballmer’s purchase of the Clippers, a price that eclipsed the previous record by almost four times and boosted the value of all professional sports teams.
Prokhorov paid about $220 million for his share of the Nets, which according to ESPN lost $144 million last season.
Prokhorov, who ran against Vladimir Putin for president two years ago, has a net worth of $11.1 billion, down from a high of $12.5 billion in November, according to the Bloomberg Billionaires Index.
It isn't known whether the Russian crisis has any bearing on the decision to sell the team. The ruble has weakened against the dollar and declining oil prices put the country on the brink of recession. Sanctions, introduced by Western countries against some of the largest Russian companies, increased concerns about its ability to service its external debt.
Putin last year said Russian businessmen “need to understand their responsibility” during a meeting with the Russian Union of Industrialists and Entrepreneurs. He called for Russian-owned companies to register and to pay taxes in Russia.
“Given the recent speculation that Mr. Prokhorov might sell his interest in light of the slumping Eastern European economies this is certainly an interesting development,” said Chuck Baker, head of sports mergers and acquisition as a partner in DLA Piper’s Global Sports, Media and Entertainment practice.
The Nets are the second NBA team on the market, joining the Atlanta Hawks, whose ownership group put the team and operating rights to Philips Arena up for sale on Jan. 8.
The Nets and Hawks hit the market at a time of mushrooming revenue for the league, which reaped $5.5 billion last season. In October, Walt Disney Co. and Time Warner Inc. renewed their contracts to carry NBA games through the 2024-25 season, tripling payments. The networks agreed to pay $24 billion over nine years, prompting Washington Wizards owner Ted Leonsis to say “there’s never been a better time to be an owner of an NBA franchise.”
The NBA and ESPN also are planning an online video service that will show live games and be available to customers who don’t pay for cable or satellite TV. The league received an undisclosed equity stake in that venture.
Moreover, NBA Commissioner Adam Silver said the league will eventually profit from movements in states like New Jersey to legalize sports gambling.
Among those who have expressed interest in the Hawks are former players Grant Hill and Junior Bridgeman, as well as BTIG LLC’s Steven Starker and Marquis Jet co-founder Jesse Itzler. Hill was also a member of a Tony Ressler and Bruce Karsh-led group that bid on the Clippers, whose auction attracted billionaires including Oracle Corp. Chairman Larry Ellison, music industry executive David Geffen and Oprah Winfrey.
The Nets, who have the highest payroll in the league at about $91 million, are 16-22 this season.